Long-Term Holders Held Through Bitcoin's Crash Caused By Large-Scale Liquidations

Long-term holders held onto their Bitcoin BTC/USD as it crashed on Sept. 7, further confirming that it was no more than a hiccup on the coin's way up.

What Happened: According to Glassnode's number of accumulation addresses chart, the recent price dip resulted in more Bitcoin accumulation and not selling. Furthermore, the amount of hodled (cryptospeak for held for the long term) or lost coins also increased, as did the total supply held by long-term holders.

What is most likely the culprit of this week's Bitcoin price flash crash is a great number of highly-leveraged long positions on Bitcoin's derivatives market, which exacerbated what would have been a minor correction through a wave of liquidations. Glassnode data shows that global Bitcoin futures open interest fell by nearly 24% from nearly $19 billion before the crash down to $14.5 billion the next day.

ByBT data also confirms that mass liquidations are to blame for Bitcoin's most recent flash crash, considering that its shows $3.22 billion worth of long liquidations on Sept. 6 — a staggering 457% increase over the day before.

All of this suggests there's a silver lining to the event: the market should be more stable until it builds a significant base of excessively leveraged positions once again.

Still, the wave of liquidations just amplified a — albeit much less intense — downward pressure in Bitcoin's market. On-chain monitoring service Whalemap claims in a recent tweet that the market saw a major sell-off on the spot market by major holders that joined Bitcoin quite recently.

BTC Price Action: As of publication Friday, Bitcoin was down 3.8% over the previous 24 hours and trading at $44,653.

Photo: André François McKenzie on Unsplash