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The selloffs began with the LFG, which dumped 80k BTC in an attempt to save the failing UST
In research published on July 21, crypto financial service provider Arcane revealed that the series of scary selloffs started around May 10 and that, while most of the selloffs were as a result of forced selling, a few of them weren’t.
The dumps began with the Luna Foundation Guard. The company, which was in charge of sustaining the peg of UST to the dollar, had an initial target of amassing up to $3B worth of BTC in its reserves, totalling 80,000 tokens at the time. The target was reached on May 4 – five days before the Terra issue escalated.
The LFG had no choice but to empty its BTC reserves to save the already failing stablecoin. The 80,000 BTCs were systematically dumped on separate occasions to purchase large volumes of UST to sustain the peg. Regardless, UST fell alongside LUNA, and this more than just affected Terra – it affected most of the crypto space as many investors had funds in both assets.
Following the 80k BTC dump by the LFG and the enormous FUD the Terra collapse and the declining markets caused, a wave of capitulation hit most investors. Miners started dumping their BTC holdings as well. The Arcane research reveals that about 4,456 BTC was sold by public miners alone in May. For context, the amount sold off in April was less than 1,000.
 
 
3AC’s default resulted in more panic and, subsequently, further selloffs
Furthermore, Elon Musk’s Tesla revealed it had sold off 75% of the BTC held on its balance sheet – an estimate of 29,060 BTC. The electric vehicle firm had been periodically dumping its holdings before the disclosure, which was made through its Cash Flow report for Q2 2022.
Macroeconomic conditions also aggravated the predicament fueled by the failing markets and the Terra collapse. On June 10, the U.S. CPI data indicated that inflation had risen by 8.6% to a 40-year high. The devastating news sent panic into most financial markets, and the crypto space was not spared. The space witnessed several liquidations and pressure mounted on whales.
Crypto hedge fund manager 3AC was majorly hit by the catastrophic turn of events, facing Margin calls and being unable to pay back its debt to many firms, including Celsius Network and Voyager Digital. The extent of 3AC debt was massive, totalling $3.5B owed to about 20 firms. The biggest lender is Singapore-based private firm Genesis Asia Pacific.
3AC’s default led to its ultimate liquidation. This resulted in more panic and further liquidations. Subsequently, Miners resorted to selloffs in June as well, with most assets falling to surprising margins. The Crypto FGI sank to a value of 9.
Nonetheless, in what appears to be a light at the end of the tunnel, the crypto markets have in July begun to recover from the downturn of the previous months, and the community hopes that the current pattern continues. The BTC Coinbase Premium Index is positive, indicating a high buying pressure on US institutional investors.
Source: https://zycrypto.com/over-200k-btc-has-been-dumped-by-institutions-since-may-in-the-heat-of-the-bear-market/