Coinbase: Speculators are responsible for the fall of the cryptocurrency market

Analysts at the American cryptocurrency exchange Coinbase assure that in the falling market, long-term holders of bitcoin almost did not sell BTC.

Miners and crypto companies forced to liquidate their positions in order to remain solvent in the face of liquidity outflows, Coinbase’s “Elusive Bottom” report in June, said that the industry is facing credit risks, not a cryptocurrency crisis.

The number of investors who held Bitcoin for more than six months dropped from 80% to 77% at the beginning of the year. They currently hold 21 million BTC in their wallets. The report states that Bitcoin has shown relative strength as the long-term holders’ ownership rate surpassed 60% at the peak of the previous cycle in December 2017, despite selling pressure during periods of turbulence. Coinbase notes that centralized blockchain (CeFi) lenders spiked their short-term debt when the bull trend reigned.

“They were taking out huge loans on DeFi protocols and squeezing capital to counterparties who were paying even higher interest rates. Some counterparties have had duration inconsistencies and severe re-mortgaging of assets in their ledgers” provided to cryptocurrency hedge funds and other entities,” the report says.

The authors of the report believe that the debt burden increased until a strong correction hit the market, which led to an increase in a kind of contagion effect that quickly spread through the market.

Exacerbating the ongoing credit crunch, listed miners who borrowed heavily against bitcoin or mining equipment during the bull run have been forced to sell their positions as asset values ​​plummet. But since the top 28 public mining companies account for only 20% of the Bitcoin hashrate, their sales do not have a significant impact on trading volume.

Analysts at Glassnode claim that the large-scale fall in the cryptocurrency market has led to a “flight of tourists and margin traders.”