236K BTC Sold by Large Institutions Since Terra’s Implosion in May

In a recent Twitter thread, Arcane Research analyst Vetle Lunde revealed how many Bitcoin institutional investors had sold since Terra’s carnage kicked in, thus tanking the whole crypto market. In his estimate, Tesla sold 29,060 BTC at an average price of $32,209 in May.

Forced Selling

In Lunde’s view, massive institutional blow-ups in the past two months started from Terra’s collapse on May 10th – when Do Kown sold over 80K BTC to defend the UST peg.

Since then, the contagion has spread quickly across the industry and deepened the selling pressure, leading to 236,237 BTC being sold by large institutions. Lunde noted that “the number does not account for other natural capitulation and hedging activity that usually occurs during crypto bear markets.”

Amidst markets going sour, publicly traded miners were pressured to offload their Bitcoin holdings, selling a total of 4,456 BTC in the month. In the meantime, Tesla sold 75% of its BTC holdings, which could be translated to 29,060 BTC, according to Lunde’s estimate. Tesla still holds 9,686 BTC – down from 43,053 by Feb.1st, 2021.

Considering that Tesla sold 10% of its former holdings for “testing liquidity” in Q1 2021 when Bitocin rallied, the EV giant’s new break-even price of BTC came down from $34,841 to approximately $33,325. Therefore, when executing the big sales in May this year, Tesla only suffered a slight loss.

Bankruptcies Hitting Lending Firms

In June, the predominant selling pressure first stemmed from the CPI index hike, which sent the asset’s price south again, “bankrupting several whales already under pressure after Luna’s collapse.” In particular,

3AC’s meltdown impacted already-troubled lenders like Celsius and Voyager, which both filed bankruptcies in the following month. The Singapore-based hedge fund owed lenders 18,193 BTC and other digital assets equivalent to 22,054 BTC, according to leaked court documents.

In addition to 3AC’s massive liquidation that dragged down the whole market, Canadian Purpose ETF redeemed 24,510 BTC between June 16th to June 20th, further exacerbating the market selloffs. As a result, the primary cryptocurrency even dipped below $17,700 at one point on June 19th.

The last two months had been a capitulation phase, concluded Lunde. The extent of the market selloff could have been worse than what he had covered due to “underwater retail and institutions capitulating.” For now, He believed the ongoing relief rally has indicated that the contagion is getting resolved as market uncertainty declines.

The Chapter 11s, 3AC court documents, normalization of the stETH/ETH price, and the relief rally seen in the last few weeks tell me that contagion is getting resolved. Less uncertain times ahead. pic.twitter.com/dAwlyy2boR

— Vetle Lunde (@VetleLunde) July 21, 2022