Bitcoin fell by over 10% in a day to about $55,000 following a considerable correction. On-chain data suggests that it could be attributed, to some extent, to sizeable deposits to the large US-based cryptocurrency exchange Gemini, just before the drop. However, Glassnode data refutes this option, claiming that the transfers were internal.
Everything seemed to be going in BTC’s way in the past several days. The asset had just recovered from its latest price drop, added $19,000 in less than two weeks, broke above $60,000 for the first time, and went on to a new all-time high at $61,800 on Saturday.
The situation reversed vigorously for the primary cryptocurrency in the following hours as the bears put significant pressure that resulted in a $7,000 drop to $55,000.
As usual, the community speculated on possible reasons behind the dip, and one of the most discussed theories was the latest news about a crypto ban coming from India. However, the nation has dabbled with this idea for months now, so most members dismissed the idea rather quickly.
Instead, Ki Young Ju, the CEO of the analytics company CryptoQuant suggested another possibility. He outlined a massive deposit to Gemini’s hot wallet of 18,000 bitcoins (worth over $1 billion at the time).
Following the last large deposit to Gemini of 28,000 coins on February 21st, BTC’s price dropped from $58,000 to $43,000 in a few days. As such, he warned that bitcoin could suffer again if history repeats itself.
Ju advised traders to avert from overleveraged positions. That doesn’t seem to be the case, as over $2.2 billion were liquidated across crypto exchanges in the past 24 hours alone.
In contrast to the theory above came data from a rivaling crypto analytics resource – Glassnode. In the light of the massive coin movement, the firm offered a contradicting opinion by indicating that the transactions were internal.
“Those are funds that were already on the exchange’s wallets and were simply transferred internally.”
Consequently, if those 18,000 bitcoins were already in Gemini’s other wallets and were not deposited by users looking to take some profits off the table, their movement should have a little-to-no impact on BTC’s price.
Following the release of this article, CryptoQuant provided an update to defend its stance.
“THe source of funds is not Gemini if you track down transactions. They don’t use P2SH addresses for user deposits wallets which prefix starts with ‘3’. It is supposed to start with ‘bc1’ or ‘1’.”
Upon outlining the transaction, the company indicated that there are three possibilities. Namely, those are whales deposits, filing up Gemini’s liquidity from other exchanges, or OTC deals. However, CryptoQuant asserted that “this is NOT an internal transfer.”
