On January 22, bitcoin dropped to lows of $28,950. Analysts and experts believe that miners sold huge amounts of their holdings but the big buyers ensured that the dip was minimized. This week’s volatility may come down to a push-and-pull between F2Pool selling and Grayscale buying.
Based on data acquired from CryptoQuant, the past several days saw massive outflows from mining pools. It corresponded to bitcoin losing 20% within a week.
F2Pool Daily Outflows Reach 10,000 BTC
Starting January 15, outflows from F2Pool, which is currently the largest mining pool that commands about 15% of the total hash rate, started to rise. By January 17, the daily outflows had reached 10,000 BTC ($313 million), and it continued for three days consecutively before returning to normal levels.
F2Pool seems to be responsible for most of the outflows, which does not mostly mean that miners sold bitcoin on the open market; but just that they shifted their mined coins from their original wallet.
The numbers form a practical counterargument that explains BTC’s abrupt price drop this week, irrespective of the mining pool’s motives. In the past, theories including the controversy that is surrounding the stablecoin Tether (USDT) and a recovering dollar were being pointed to as the main causes of the downward volatility.
In the meantime, bitcoin exchange balances have remained constant all through January coming in contrast to the wider downtrend that has remained constant since summer 2019, data shows.
Sales Coincide With Massive Grayscale Buys
If the F2Pool coins should have created a big glut of new bitcoin supply for sale on the bitcoin market, one buy, in particular, probably scooped them up quickly. According to previous reports, Grayscale asset management firm added huge amounts to its assets under management this week. These huge purchases might have helped bitcoin avoid deeper drops.
Grayscale recently announced Q4 2021 report, in which it stated that institutional investors provided around 93% of its inflows. That information supports the idea that it is the primary buyer of all spare BTC supply.
CEO Michael Sonnenshein thinks that this year will experience massive interest from the financial advisors in the bitcoin space, coupled with a drop in associated investment risk.