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.
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.
Also read: Flash Crash: Bitcoin Price Slides by $1.4K in Minutes
