selling pressure continues despite strong fundamentals

Bitcoin (BTC) and several crypto-assets have fallen sharply over the past day, after a reversal of earlier gains into losses in international stock markets following a 50 basis point rate hike by the US Federal Reserve (EDF). This sharp decline occurred despite the massive purchase of bitcoins made by Luna Foundation Guard (LFG).

Source: Adobe/James Thew

BTC is currently trading around $35,700, down 9% in the past 24 hours and down almost 10% in the past 7 days. At the same time, Ethereum (ETH) was trading at $2,660, down over 8% on a daily and weekly basis.

The selling pressure on Bitcoin over the past day has not let up, even after news broke that the company Luna Foundation Guard of the founder of Terra (LUNA), Do Kwon, had bought $1.5 billion worth of BTC on the market. The latest purchase was made with the help of the crypto hedge fund Three Arrows Capitalhas confirmed Do Kwon on Twitter.

This purchase is part of an effort to partially back Terra’s UST stablecoin with BTC. Do Kwon had previously declared that he wanted to buy up to $10 billion worth of bitcoins.

“For the first time, you’re seeing a collateralized currency that’s trying to meet the Bitcoin standard. It’s betting that keeping a lot of those foreign exchange reserves in the form of digital currency is a winning recipe,” Do said. Kwon, quoted by CNBC, Thursday.

The massive purchase by LFG quickly became a topic of discussion in the crypto community on Twitter:

On-chain fundamentals remain strong

Blockchain analytics provider data Glassnode showed that the amount of BTC that hasn’t moved in over a year hit an all-time high in April, and represents over 64% of all BTC in circulation.

Commenting on this observation, Noelle Achesonhead of market analysis at Genesis Tradinghas declared that this shows that BTC is held for the long term, adding that it is “very difficult to play.”

It’s no small thing that the amount of BTC that doesn’t move in a year has never been higher, Acheson said.

Source: Noelle Acheson/Twitter

Besides, the crypto exchange kraken also highlighted the strength of on-chain fundamentals for Bitcoin in its April monthly report released on Thursday.

According to the report, daily active addresses on the Bitcoin network increased by 0.2% month-over-month in April. And while the upside is relatively small, Bitcoin is the only monitored network — other than Solana (SOL) — that saw an increase in daily active addresses in April.

By comparison, the number of active addresses on Ethereum fell by 3% over the same period.

However, despite these somewhat bullish on-chain numbers, analysts expressed largely negative sentiment in the market after yesterday’s sell-off.

‘Fear is the dominant feeling,’ Bloomberg told Dennis Dickproprietary trader and head of market structure at Bright Trading. “People thought that [mercredi] signaled the go-ahead, but now they’re backtracking again.”

“Incoming retail traders keep getting fleeced. Contrarians have won 2022,” Dick added.

During this time, Randy Frederickvice president of trading and derivatives at the asset manager Charles Schwab & Co, argued that the stock market was witnessing a “capitulation.” :

“Everyone is throwing it down. This is the first day I would describe as a day of surrender.”

Perhaps the best summary of the situation was shared by Sven Henrichfounder of the trading and analysis site NorthmanTrader :

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