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BTC is under increased selling pressure in the short term after struggling to reclaim the $50,000 mark. Short-term headwinds, however, do not erase the bull market.
The price of Bitcoin (BTC) fell below $46,000 for the second time in four days on Sunday, improving the prospect of a broader short-term correction for the flagship digital currency.
Bitcoin fell to a session low of $45,127.01, according to TradingView, before staging a modest recovery to around $45,400. The largest cryptocurrency by market capitalization is down 5% on the day and over 20% in the last seven days.
The BTC selloff led to a market-wide reversal for crypto assets, with Ethereum (ETH) falling 7%, Polkadot (DOT) falling 10%, and Binance Coin (BNB) falling 3%.
The market’s attitude towards cryptocurrencies has deteriorated in recent days, following the revelation that Tesla no longer accepts Bitcoin payments for its cars. Headlines about a proposed US Justice Department probe into Binance have also sparked questions about a likely regulatory retaliation.
Caitlin Long of Avanti digital bank claims Tether’s first-ever reserve announcement has frightened investors. Long said on Twitter on Saturday that Tether’s “probability of default [and] loss severity in default just went up” due to its credit exposure. Specifically, almost two-thirds of the company’s currency and cash equivalents are kept in commercial paper.
Institutions are accumulating
Despite the market’s current noise, institutions are buying Bitcoin with increasing conviction, providing convincing proof that the bull market is far from done.
Bitcoin Treasuries, which tracks corporate and institutional exposure to BTC, reported Saturday that institutions have accumulated 215,000 Bitcoin in the past 30 days. That’s equivalent to roughly $10 billion.
Institutions have accumulated 215,000 #bitcoin in the past 30 days.
— Bitcoin Magazine (@BitcoinMagazine) May 15, 2021
Corporations that have Bitcoin on their books have had a big return on investment. According to Bitcoin Treasuries, the amount of MicroStrategy’s BTC balance has increased by 2.3 fold. Square’s Bitcoin stash has increased in value by 2.1 fold. The valuation of Riot Blockchain’s holdings has risen by 9 times. These numbers have dipped marginally as a result of the recent market correction.
For the better part of a year, institutions have been pouring money into Bitcoin. These so-called smart money holders are a major explanation for Bitcoin’s meteoric rise from $10,000 last summer to a peak of about $64,000 in April.