According to Tradingview citing Coinbase prices, BTC crashed to around $46,800 before bouncing back over $50k again during Tuesday morning’s Asian trading session.
The move wiped out over $9,000 in a couple of hours as a cascade of leveraged positions was liquidated on exchanges such as Kraken.
Today’s market crash is brought to you by Kraken’s malfunctioning trade matching engine. pic.twitter.com/m2sBqdTt4M
— Kevin Lu (@luyongxu) February 22, 2021
There has been a recovery from the flash crash but BTC prices are still down 14% from their weekend all-time high of $58,250.
The Coinbase Premium Effect
The U.S. exchange, and one of the world’s largest fiat onramps which recently launched ETH 2.0 staking, is known to have a premium where prices differ from elsewhere. The premium is the gap between the Coinbase Pro USD price and the Binance price in Tether. The higher the premium means that Coinbase whales have been accumulating Bitcoin despite its high price.
According to on-chain analytics provider, CryptoQuant, that Coinbase premium slumped to its lowest level ever at -$1,020 before surging back to +$486.
The data provider’s CEO, Ki Young Ju, commented that whales have been accumulating which means that prices are not likely to fall much lower since Coinbase is one of the market’s largest drivers.
“Remember who’s driving the market. Coinbase whales have been accumulating $BTC in 44-48k range. Even if there are more corrections, it’s unlikely to go down below 44k.”
Coinbase Premium hit the all-time low -$1020 and then skyrocketed +$486.
Remember who’s driving the market. Coinbase whales have been accumulating $BTC in 44-48k range.
Even if there are more corrections, it’s unlikely to go down below 44k.
Chart👉 https://t.co/gC1Jqrbn9b pic.twitter.com/o1w1kQsX2L
— Ki Young Ju 주기영 (@ki_young_ju) February 22, 2021
CryptoQuant data shows that the premium went up to +$77 the first time that Bitcoin broke $20k back in mid-December. It was as high as +$160 when BTC first topped $30k and peaked at $174 when the asset first breached $40k.
Institutional Bitcoin Hodling
The research added that whales tend to realize profits when retail traders are in the market (which is usually towards the peaks of a bull run). But it also added that institutional investors that have been loading up recently are holders and will keep the asset as an inflation hedge.
“Many U.S. institutions buy Bitcoin through Grayscale (GBTC) and even make GBTC premium. Our users often use this indicator as a bullish signal.”
Grayscale has sold very little BTC and its most recent post on Feb. 22 suggests that assets under management figures are still hovering around their highest ever levels of $42 billion.
Today’s market crash is brought to you by Kraken’s malfunctioning trade matching engine. pic.twitter.com/m2sBqdTt4M
— Kevin Lu (@luyongxu) February 22, 2021
Bitcoin may have a little further to fall as it moves back below $50k again but all indications are that it will be a much higher low than previous market slumps.
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