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Story from Markets Bitcoin Investors Unshaken by Sunday’s Flash Crash, Data Suggests

Bitcoin investors appear to have shrugged off Sunday’s violent price crash, according to one data metric. 

  • In just minutes, prices fell by around $1,400 from over $12,000 to sub-$10,700 levels Sunday.
  • The rapid fall crowded out over $1 billion in bullish leverage from the futures market.
  • Yet, as the cryptocurrency declined, users withdrew more coins from exchanges than they deposited, suggesting holders were not spooked by the big mover lower.
glassnode-studio_bitcoin-exchange-net-flow-2
Net flow of bitcoin to and from exchanges (inflow in green/outflow in red).
  • Cryptocurrency exchanges witnessed a net outflow of 4,264 BTC on Sunday, marking a sharp rise from Saturday’s figure of 436 BTC, according to data provided by the blockchain intelligence firm Glassnode.
  • Investors tend to pull funds out from exchanges when they expect a sustained price rally and move their coins to exchanges when they want to liquidate their holdings; for example, before an expected price drop. 
  • As such, Sunday’s data would suggest that investors shrugged off the crash having confidence in bitcoin’s long-term prospects.
  • Sunday’s flash crash is rumored to have been caused by an Asian whale, or big trader, who took profit on a long position after prices hit $12,000 amid thin volumes.
  • The resulting small price drop is said to have set off a chain reaction of forced unwindings of long positions by exchanges, rapidly leading to the bigger decline.
  • At the time of writing, bitcoin is back up near $11,200 – still up nearly 56% on a year-to-date basis.
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