Crypto Market Roundup: Aaaaand Down We Go

May 14, 2021

Well, that was fun while it lasted.

Unless you hold Cardano, your portfolio must have taken quite a tumble this week. And to think it started oh so well with Tom Brady and Mark Zuckerberg’s goat. (More details here).

Anyway, it is what it is. If you are a longtime player in the game, you must be used to these gut punches.

However, if you are new to the game, then welcome to crypto! It’s not always about the #gainzzz and insta flex posting. Every now and then, the market decides to shove you off your pedestal.

Anyway, what exactly happened? How does it look for Bitcoin? Let’s take a look.

Elon </3 Bitcoin

So did Elon Musk just do a heel turn?

Back in February 2021, Tesla announced that they had purchased $1.5 billion worth of Bitcoin, and a month later, Musk tweeted that Tesla will start accepting BTC as payment for their cars. All this surged Bitcoin price to hit a new all-time high. However, the news has been less than rosy since then.

First, news came out that Tesla had sold off some of their Bitcoin and then, earlier this week, Musk announced that Tesla will no longer be accepting BTC because of the environmental ramifications. Bitcoiners have since responded by canceling their Tesla orders.

Anyway, the markets have since tumbled. So, how has this affected Bitcoin? Let’s take a look at some on-chain analysis.

Bitcoin On-Chain Analysis

Since the beginning of the week, the Bitcoin price has tumbled from $71,375 CAD to $61,500 — losing almost $10,000 in the process!

So, how has this affected the on-chain analytics?

First let’s look at the social volume chart.

WHOAH… major major spikes! Especially on May 13 when Musk made the announcement. When you compare this with the price in the chart, we can see a significant tumble following the spike. What this means is that the spike in social volume caused a lot of FUD, and the investors immediately sold off their holdings.

What adds further credence to our outlook is the token velocity chart.

Token velocity is a term that is used to describe the “holding worthiness” of a token. So, if I get token A, and I believe that it will appreciate significantly in the future, I will hold on to the token instead of selling it off. In this case, token A is a “low velocity” token. So, we can conclude that the higher the velocity, the lower the perceived value of the token. As you can see in the chart, Bitcoin’s velocity shot up, which indicates that most of the investors were willing to sell off their BTC over the last two days instead of holding on to them.

Now, up next, let’s check the age consumed metric.

Age consumed metric tracks the movement of previously idle BTC. The metric shows the amount of BTC changing addresses daily multiplied by the number of days since they last moved. Spikes indicate a significant amount of previously idle BTC tokens moving between addresses. In other words, a whale has moved their coins.

Ok, but where exactly have they moved these coins? Have they been driving it to the exchanges? Let’s look at the exchange inflow metric. The exchange inflow is a graph that shows us how many tokens are being sent to Exchange. These inflowing tokens are mostly sold off in the open market.

Well, well, well, what do we have here. There are significant spikes in the last 48 hours, as investors have been pushing their BTC into different exchanges. There are considerable Bitcoin price drops corresponding to these spikes. This conclusively shows that BTC investors panic-sold their coins after the Tesla-Bitcoin breakup.

MicroStrategy Buys The Dip — Again

Stop me if you have heard this before, but MicroStrategy has bought the dip…again. The company bought 271 BTC on Thursday for $15 million USD. This brings their overall holdings to 91,850 BTC (~$2.24 USD billion at an average price of $24,403 per BTC). CEO Michael Saylor called Bitcoin “the most powerful and disruptive technology of our lifetime.”

In Closing

So, weak hands prevailed, this time around, after Tesla Technoking decided to play puppet master with the markets again. However, the major whales like MicroStrategy seem to have decided to buy the dip. Let’s see what happens this time next week!

Oh, and before I go, do you like Bitcoin? Do you like free Bitcoin? I sure do.

Why don’t you take our GetSmart Quizzes? Successfully answer the questions and win some SATs (satoshis)? After that, spread the love and send the quizzes to your friends and family. Let’s all earn some free SATs!

Disclaimer: Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. CoinSmart and Jeremy Koven do not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Jeremy Koven, co-founder and COO of CoinSmart, has spent the last 12 years running successful internet companies from the ground up.