This week’s volatility could be reduced to a tug of war between sales of F2Pool and the purchase of Grayscale.
Bitcoin (BTC) fell to $ 28,950 on January 22, thanks to miners who probably sold large quantities of their assets – but large buyers ensured that the drop was minimal.
According to data from the on-chain monitoring feature CryptoQuant, in the last few days there have been large exits from mining pools, which in turn corresponded to BTC / USD falling 20% in one week.
Daily outflows from F2Pool reached 10,000 BTC
As of January 15, outflows from F2Pool – currently the largest mining pool comprising around 15% of Bitcoin’s hash rate – in particular, started to increase. On January 17, daily departures reached 10,000 BTC ($ 313 million), continuing for three consecutive days before returning to levels closer to normal.
F2Pool appears to be responsible for the vast majority of exits, which does not necessarily mean that miners sold BTC on the open market, but simply that they moved the coins extracted from their original wallet.
Regardless of the pool’s reasons, the numbers form a welcome counter-argument, explaining the sudden drop in Bitcoin’s price this week. Previously, theories, including the controversy surrounding the stablecoin Tether (USDT), as well as the dollar’s recovery, were identified as the main causes of downward volatility.
Meanwhile, Bitcoin’s currency balances have remained constant throughout January, in contrast to the general bearish trend that has been in effect since the summer of 2019, the data show.
Sales come amid large Grayscale purchases
If F2Pool’s coins had formed a large excess of new supply of BTC for sale on the market, a buyer would probably buy quickly.
Asset management giant Grayscale added conspicuous amounts to its assets under management this week, potentially helping BTC / USD to avoid a deeper dive.
The company report published recently in the 4th quarter of 2020, in which it states that the institutions provided 93% of its inflows, reinforces the idea that it is Grayscale is the main buyer of any spare BTC supply.