Between Tuesday and Wednesday, Bitcoin fell a total of 6.25 percent, with $50 million worth of liquidations occurring. While that’s a small drop compared to the drop on Aug. 2, people may be worried about a price collapse.
Similar, perhaps, to the March crash that wiped out more than 50% of Bitcoin’s price, the crash caused widespread panic and layers of liquidation to the tune of $1 billion.
On the miner’s side, it caused many farmers to shut down, which led to a sharp drop in Bitcoin’s hash rate and ultimately led to a difficult adjustment.
It’s safe to say that this crash will be remembered by everyone in the industry. However, such crashes are more common in Bitcoin, with a similar flash crash occurring in November 2018 during the Hash Wars.
Thus, the question remains.
“Should you be worried about another Bitcoin collapse?”
On-chain metrics may be helpful to understand about potential Bitcoin crashes, as CryptoQuant’s “All Exchange Reserves” shows the reserves of all cryptocurrency exchanges, and the attached chart below shows that exchange balances have been depleted.
To be precise, exchange reserves have decreased by 14% since March 2020. At the time of writing, the exchange bitcoin reserves were 2.4 million BTC. said the CEO of CryptoQuant.
“People have been worried about a big sell-off like in March, but the exchanges don’t have as many idle bitcoins (waiting to be sold) as they did that day.BTC exchange stockpiles are at a new low for the year and miners are holding on. I don’t think this will break the bullish trend.”
In addition, the miner holding index from CryptoQuant also shows a value of -0.339, indicating that miners are not selling, but rather stockpiling BTC.Considering the price of bitcoin at $11,000-$12,000 and the water level, holding seems to be in the miners’ favor.
While this is all true, altcoins’ has rallied, driven by DeFi; combined with Bitcoin’s price and other fundamentals, this is a bull market and a crash seems unlikely.
However, it would be wise to hedge against the crash, especially with the CME gap at $9995 to $9665.