Chainalysis Report: Who is Selling Bitcoin?

Chainalysis released an analysis report on the Bitcoin crash. The main points of the report are as follows:

1. Since March 9, cryptocurrency exchanges have experienced the largest Bitcoin inflows ever.

2. From March 12 to March 13, the amount of Bitcoin flowing into exchanges was 9 times the usual amount. This selling pressure caused the price of Bitcoin to fall by about 37%.

3. After March 13, the inflow of Bitcoin into exchanges has dropped to twice the usual level, indicating that the pressure on Bitcoin prices has eased.

4. Large professional traders and investors are dominating the cryptocurrency market.

5. The amount of Bitcoin that flowed into exchanges in the past eight days accounted for about 5% of all available Bitcoins (the number of Bitcoins that have been mined minus the number of all lost Bitcoins), indicating that most Bitcoiners still want to continue holding Bitcoin.

1. Selling pressure increased significantly, but eased somewhat

Since March 9, cryptocurrency exchanges have received a total of 1.1 million bitcoins in 8 days, with a peak on March 12 and 13 (about 9 times the usual amount), about 475,00 more bitcoins than usual. Since the beginning of the year, an average of 52,000 bitcoins flowed into exchanges every day before March 9.

From March 9 to March 16, as much as 1.1 million bitcoins flowed into exchanges within 8 days, 712,000 bitcoins more than usual.

Of these 712,000 bitcoins, 40,000 to 240,000 bitcoins remain on exchanges, which means that only 6% to 34% of the inflow of bitcoins has not been sold or has changed hands, but the holders of the bitcoins that have changed hands can still sell them again. In other words, most of the bitcoins that have flowed into the exchange have been sold, and the worst seems to be over.

Additionally, the amount of Bitcoin that flowed into exchanges over the past eight days accounted for about 5% of all available Bitcoin (the number of Bitcoins that have been mined minus the number of lost Bitcoins), indicating that most Bitcoiners still want to hold on to Bitcoin.

2. Who is selling Bitcoin?

Preliminary findings indicate that despite a significant increase in small-volume Bitcoin trading activity, professional traders accounted for most of the increased Bitcoin inflows.

Since March 9, the amount of Bitcoin moving in and out of exchanges via small transfers (between 0.1 and 10 Bitcoin) has almost doubled. This indicates a large amount of “retail” activity on both the buyer and seller sides. However, it is worth noting that 70% of Bitcoin transfers were between 10 and 1,000 Bitcoin, which is slightly higher than usual. In addition, 10% of Bitcoin transfers were over 1,000 Bitcoin.

This trend suggests that powerful professional traders and investors are dominating the cryptocurrency market.

Considering the continued sell-off of Bitcoin, NewsBTC published an article stating that the continued sell-off has made Bitcoin miners basically unprofitable and also caused the cryptocurrency's computing power to plummet. Changes in miners' profitability may have an impact on BTC prices in the short term. Glassnode said that since its peak on March 7, the seven-day moving average of Bitcoin's computing power has fallen by about 16%, and after BTC fell to $5,000, the computing power fell faster.

Given the uncertainty surrounding the emerging coronavirus, it’s difficult to predict where the cryptocurrency market will go next. However, a large increase in exchange inflows has proven to be a good indicator of increased volatility.