Institutional investors are not abandoning Bitcoin, Chainalysis observes, although they are being cautious for the time being. Some, however, are taking advantage of the downturn to buy.
Is a new crypto winter on the horizon? The cryptocurrency market capitalization has lost over $500 billion. There is no shortage of qualifiers in recent days.
The “bloodbath” is affecting both Bitcoin and Altcoins. Between May 12 and 19, the price of BTC plunged from $58,000 to $36,000. All in all, cryptocurrency prices recorded more than a 30% drop over the period, Chainalysis measures.
Such corrections are rare in the young history of crypto. The chief economist, Philip Gradwell, recalls that Bitcoin had suffered such declines on only four occasions. And three of them refer to the previous crypto winter.
The concern is high as a result. Are Bitcoin and other cryptocurrencies entering a new era of decline? Not necessarily. In particular, Gradwell points out that BTC and ETH prices remain historically high.
“So, is this the end of the bull market? Is crypto winter coming? I don’t know, but my inclination is to say no. There are many differences between today and the major price declines of March 2020 and December 2017,” the Chainalysis expert believes.
Like Glassnode, he distinguishes in particular two categories of investors with distinct behavior. The retail, individuals, tends to sell on exchanges. This is not the case for institutional investors.
However, institutional investors are cautious and “simply do not buy as much as before”. However, some are starting to see the price drop as an opportunity to buy and accumulate crypto again.
A BTC whale’s May trading reflects this potential trend perfectly. On May 9, she was selling 3,000 bitcoins for an average price of $58.5K. However, on May 15, 18 and 19, after major price drops, she was making three purchases for a total of 3,521 BTC.
“It also doesn’t appear that institutions are significant sellers, although they may be more cautious as buyers at the moment (…) This suggests that much of the selling is by people with assets already on the exchanges, who tend to be retail investors,” Philip Gradwell deciphers.