BitMEX founder Arthur Hayes is looking into the possibility that Bitcoin may have already printed the bottom of the bear market, saying that three key players are likely to have exited BTC for selling.
In a new blog post, the crypto veteran identified three investor groups that have been forced to part with their Bitcoin portfolios this year due to the abuse of leverage: centralized lending and trading companies, Bitcoin mining Diggers and casual speculators.
Looking first at the central firms, Hess says these institutions likely lost most of their BTC following the collapse of crypto hedge fund Three Arrow Capital (3AC) and Sam Bankman-Fried trading firm Alameda Research.
“When these two companies [Alameda and 3AC] Faced with problems, what did you see? We saw large transfers of several liquid cryptocurrencies – Bitcoin (WBTC in DeFi) and Ether (WETH in DeFi) – to centralized and decentralized exchanges that were resold. It happened during the great movement…
I can’t definitively prove that all of the Bitcoin held by these failed entities was sold during most of the event, but it appears that they did their best to drain the most liquid crypto collateral before they went under. come on
of the [centralized lending firms] And all major trading companies have already sold most of their Bitcoin. All that’s left now are illegal sh** coins, personal stakes in crypto companies and pre-sale locked points.
As for Bitcoin miners, Hayes says they have been selling their BTC since the first credit crunch in June when the king of crypto fell below $20,000 for the first time in 18 months.
“They have to do this in an effort to stay current on their huge fiat debt loads. And if they don’t have debt, they still need to pay the electricity bill — and since the price of Bitcoin is so low, They have to sell more to keep the facility running.”
When it comes to casual speculators, Hess says he looks at the amount of open interest (OI) on long and short contracts to measure the level of speculation in the markets. According to him, the all-time high in OI matches the all-time high of BTC. OI also plunged as the market fell, suggesting that speculators were driven out.
“Looking at OI aggregates across all major crypto derivatives central exchanges, we can see that local OI lows coincided with Bitcoin’s sub-$16,000 stab on Monday, November 14th. Now, OI Back to levels not seen since early 2021.
The timing and magnitude of the OI reduction lead me to believe that the over-leveraged long positions are gone.
Hayes concludes by saying that he’s not 100% sure if Bitcoin’s current market low of around $15,900 is an absolute low, but he says that BTC is “due to a forced sell-off due to a credit crunch.” Dropped from this level. He also notes that everything is cyclical.
“What goes down rises again.”
At the time of writing, Bitcoin is changing hands for $17,170.
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