Key Points
- Bitcoin’s price briefly reached a new all-time high of $69,000 before experiencing a sudden drop due to heavy selling.
- Despite the flash crash, 45% of Bitcoin has not moved in over three years, indicating long-term holding.
On March 5th, the price of Bitcoin reached a record-breaking $69,000. However, this high was short-lived as the price quickly plummeted below $60,000 due to heavy selling from long-term holders.
Heavy Selling Causes Flash Crash
The sudden drop in price was linked to significant selling from Bitcoin holders. Data from CryptoQuant showed a three-day streak of Bitcoin inflows to crypto exchanges worth $525 million, hinting at traders moving their Bitcoin from cold storage to exchanges to cash in on the all-time high.
One notable example was a dormant account holder who had not touched their Bitcoin since 2010, depositing 1,000 BTC (approximately $67.1 million) into Coinbase when the price was at $67,116. This move indicated a profit of over $60 million.
Leverage Traders and Hodlers
While long-term Bitcoin holders were profiting, leverage traders were not as fortunate. Over $1 billion in leveraged positions were liquidated due to the price volatility, marking it the largest liquidation day since the previous cycle top.
The Bitcoin binary spending indicator also showed that many Bitcoin holders made a profit when the price hit $69,000. This indicator tracks the movement of Bitcoin funds over time based on their supply timeline.
The day also saw the highest selling volume on Coinbase since the FTX crash, indicating heavy selling. However, not all Bitcoin holders were in a rush to sell. CryptoQuant data showed that 45% of Bitcoin hasn’t moved in over three years, and 11% hasn’t been touched for five to seven years.
Crypto analysts viewed the recent flash crash as beneficial for the market as it eliminated high volatility and reset high funding rates. These rates represent the difference between the futures and spot markets, with high rates indicating market over-optimism dominated by long traders.
After the crash, Bitcoin’s price recovered above $66,000 within 24 hours, only 4% away from its all-time high.
