Traders are HODLing BTC and ETH Despite The $190 Billion Plunge
Amid the panic and the subsequent sell-off of Jan 11, data from CryptoQuant shows that the steep draw-down of Jan 11 may not last as traders didn’t move their Bitcoin and ETH to exchanges.
On Jan 11, the crypto market lost a colossal $160 billion as Bitcoin prices plunged by over $10k, the worst since the flash crash of mid-March 2020. At the same time, ETH retraced from 2021 highs, sinking below $1k.
Bitcoin and Ethereum Reserves at Record Lows Despite Sell-off
ETH and BTC reserves, CryptoQuant shows, remain at record lows indicating that traders, instead of FUDing, are adamant, holding on to their gains irrespective of free-falling digital asset prices.
Ordinarily, the higher the number of coins flowing to centralized crypto exchanges could suggest pessimism in price and possible degradation in days ahead, especially when technical charts show prices are at an inflection point.
This lack of confidence often causes holders to move their coins to custodial exchanges, from their wallets, where they can swap their holdings for stablecoins or cash.
On the flip side, outflows from exchanges could suggest holders changing assessment of exchanges’ infrastructure, especially on matters security as it has been happening in the last few months coinciding with the rise of DeFi, or the confidence in digital asset prices.
Looking at the latest Coinbase outflow, possibly OTC deals, I think we can estimate their PNL. $BTC surged 24% since Jan 2.
If you were institutional investors, would you be satisfied with 24% PNL for Bitcoin?#Bullish pic.twitter.com/WfLIDEfsbJ
— Ki Young Ju 주기영 (@ki_young_ju) January 8, 2021
Cushioning themselves against the risk of hacks, investors often move their stash to non—custodial multi-currency cold or secure hot wallets where they have full control of their private keys.
Institutional Support Soaking Miner Liquidation
Therefore, the BTC and ETH plunge without noticeable outflow to centralized exchanges points to confidence in short-term digital asset prices and the respective platform’s prospects.
This, interestingly, comes when CryptoQuant data points to miner liquidation. In the past 12 weeks, miners have been incessant, selling their coins to cover operational expenses.
https://twitter.com/ki_young_ju/status/1348226974045544450
Earlier, especially in the first half of 2020, their impact was massive on the thin BTC markets.
However, with demand stemming from Grayscale, CashApp, PayPal, and family offices, all of whom are facilitators allowing high net-worth investors to get crypto exposure, their impact has been low, allowing BTC and ETH prices to trend higher with added tailwinds from project-specific developments.
As per a BTCManager report, Kain Warwick, the CEO of Synthetix, speculates that Jan 11 crash maybe because of the liquidation of over-leveraged longs.
