The market has shed some blood this month, with the father and mother of all cryptos, Bitcoin (BTC) and Ethereum (ETH), down more than 50 percent from last year’s all-time highs.
Biggest Crypto Market Sell-Off Since March 2020
In what is the biggest market sell-off since March 2020, the crypto market has been hit with massive outflows following the lead of the US stock market, which also plummeted after the US Federal Reserve moved to raise interest rates by 50 basis points.
Bitcoin is currently trading at US$31,259, an 8 percent drop in the past five weeks. The second-largest cryptocurrency, Ethereum (ETH), has followed Bitcoin in its massive sell-off. As per data from CoinMarketCap, ETH has also more than halved its price, currently trading at US$2,354.
BTC chart. Source: Messari
ETH chart. Source: Messari
Thirty-day exchange flows are now almost back to neutral after this week’s sell-off, as shared by market analyst Sam Rule:
And just like that #BTC 30-day exchange flows have reversed and are almost back to neutral after yesterday’s huge inflow move.
Is any of the LFG lent bitcoin coming back? pic.twitter.com/Jll2XIgSJv
— Sam Rule (@samjrule) May 10, 2022
Things started to get worse for the market after Terra’s Luna Foundation Guard (LFG) sold more than US$750 million, disguised as an OTC (over-the-counter) loan to trading firms:
4/ As a result, the LFG Council has voted to execute the following:
– Loan $750M worth of BTC to OTC trading firms to help protect the UST peg.
– Loan 750M UST to accumulate BTC as market conditions normalize.
— LFG | Luna Foundation Guard (@LFG_org) May 9, 2022
El Salvador Buys the Dip Again
While the crypto community doesn’t seem to be bullish on the current market, El Salvador’s president, Nayib Bukele, is encouraging people to buy as long as we have the dip. Bukele recently announced that his government had bought 500 BTC at an average price of US$30k per coin, worth approximately US$15.5 million at that time:
El Salvador just bought the dip! 🇸🇻
500 coins at an average USD price of ~$30,744 🥳#Bitcoin
— Nayib Bukele (@nayibbukele) May 9, 2022
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