Latest Bitcoin Crash Shows ‘Buy the Dip’ Mentality Among Big Investors, NYDIG Says

NYDIG's analyst also noted significant BTC spot price discounts on Binance compared to Coinbase.

Apr 19, 2021 at 4:55 p.m. UTC
Updated Sep 14, 2021 at 12:42 p.m. UTC

“Our desk has been a net purchaser over the past 24-48 hours,” Greg Cipolaro, global head of research at NYDIG, a bitcoin-focused investment manager, wrote Monday in an email to subscribers.

Cipolaro published the comments after bitcoin (BTC) tumbled from a record high above $64,000 last week to as low as $51,541 early Sunday. The largest cryptocurrency was changing hands around $55,400 as of 4:37 UTC (12:37 p.m. ET).

Bitcoin's price is still up 89% this year amid speculation that big investors are using the largest cryptocurrency as a hedge against inflation following trillions of dollars of coronavirus-related economic stimulus over the past year by governments and central banks around the world.

“Institutional investors have had a buy-the-dip mentality during these risk-off events, suggesting increasing ease with handling bitcoin’s volatility,” wrote Cipolaro.

  • “We believe the root cause of the sell-off had to do with investor positioning rather than fundamental news. Simply put, traders were overleveraged and positioned long, resulting in forced liquidations."
  • Cipolaro also noted significant BTC spot price discounts on Binance compared to Coinbase. “The difference in spot, which is usually very tight, reached nearly 3% at one point. To us, these data points are indicative of selling pressure in Asia rather than North America.”

Chart shows BTC spot premium on Coinbase vs. Binance, indicative of selling pressure in Asia rather than North America, according to NYDIG.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.