Bitcoin (BTC) experienced massive outflows from exchanges last week, with $1.7 billion in net withdrawals marking the largest exodus in over a year. This trend suggests deep-pocketed investors are accumulating during the recent downturn.
Data from analytics firm IntoTheBlock revealed the substantial outflows on Aug. 9. The movement coincides with a tumultuous period in both traditional and crypto markets, sparked by what Glassnode analysts dubbed a “correlation-1” event on Aug. 5.
The market upheaval hit Bitcoin hard, driving its most severe drawdown of the current cycle. Short-term holders bore the brunt of the carnage, with a staggering 97% of realized losses attributed to this group.
Bitcoin short-term holders suffer significant losses
Bitcoin’s value took a sharp dip, sliding to the vicinity of the -1 standard deviation threshold under the Short-Term Holder Cost Basis. This is a rare event observed in a mere 7.1% of trading days. This sudden plunge resulted in a meager 7% of short-term holder assets yielding profit, echoing the heightened tension reminiscent of the August 2023 market downturn.
The turmoil extended beyond the immediate markets, impacting derivatives significantly. Liquidations totaling $365 million unfolded, dividing into $275 million from long positions and $90 million from shorts. This sweeping event triggered an abrupt 11% drop in futures open interest within a single day, reshaping the derivatives sector.
Despite the upheaval, investors holding onto their assets for the long term appeared relatively undisturbed. The market received a boost around the Active Investor Price of $51,200, indicating that this group acted as a safety net based on their initial investment.
The extent of the market decline is noticeable in different measurements. The Z-Score for Short-Term Holders’ Realized Loss registered a significant deviation of 6.85, a rarity observed in just 32 trading days throughout history. Furthermore, the group’s Realized Profit/Loss Ratio dropped to levels witnessed in only 6% of trading days.
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