Bitcoin Crash Appears to be Result of Weak-Handed Institutional Investors – Not HODLers Jumping Ship

Amid the hysteria surrounding COVID-19 Coronavirus and the recent stock market decline, it would appear that even Bitcoin isn’t immune to fear and panic in the market. Although news reports would indicate that crypto enthusiasts are losing hope in this trying time, that doesn’t seem to be the case, based on certain data.

Rapid Price Decline

On March 12, 2020, the trading price of Bitcoin fell nearly 50% to a low of $3,858.00 on Coinbase. Within 11 hours, the price was floating around the $5,650 zone.

The Cause of the Crash

It can never be boiled down to a singular cause, but the cause of the rapid decline in the price of Bitcoin appears to be a swift outflow of institutional investors and large accounts called whales. The reason why this appears to be the case is that the number of Bitcoin wallets containing 1 BTC or more grew throughout the price decline, as reported by Cointelegraph. That means that there was an increase in the number of average enthusiasts, Bitcoin users, HODLers, and traders.

The Relationship Between Institutional Investors and The Stock Market

Over the past few years, the number of institutional investors in Bitcoin has grown. Thanks to mature exchanges offering futures trading, Public Bitcoin trusts like Grayscale, and miscellaneous managed funds and accounts focused on bringing Bitcoin to seasoned investors, more people have access to invest in bitcoin than ever before. The downside to this is that many of these investors treat Bitcoin like a security or a stock.

More than ever before, investors are looking to increase their net worth with a USD basis. Although Bitcoin and USD cannot be dissociated at this time, this is a fundamental reason why Bitcoin may be tied closely to the stock market activity. 

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