Oh you noticed it too, right? Bitcoin had a not so great week before more recently starting to recover. The price of bitcoin started falling from its' all time high of $58,640.77 on Feb 21, 2021. What happened?
With these flash crashes, there is never one or even 2 causes to a sell-off. However, a multitude of factors combined often do contribute to price action in either direction.
Feb 22, 2021
Treasury Secretary Janet Yellen had a discussion with Andrew Ross Sorkin about stimulus, GameStop and cryptocurrencies. She expressed her concerns about Bitcoin as an inefficient form of money transfer, perhaps indicating an alternative for the US Federal Reserve to use in a potential Central-backed Digital Currency (CBDC).
In addition to this, as groves of retail investors created new allocations to Bitcoin, we hit an ATH on Feb 21, 2021 – this led to an overbought Bitcoin across exchanges. Then we began seeing a lot of Bitcoin (and other cryptocurrencies) move from cold-storage back to exchanges.
Feb 23, 2021
These are a very few sample of the transaction data we were seeing and it continued into Feb 23rd, 2021.
Again, these are a small sample size of the overall large transactions that were completed from Feb 21-24, 2021. There was also a notably ridiculous quantity of ether (ETH) transacted.
Feb 24, 2021
Fast forward to today and we hear the news of Square making another $170 million purchase of Bitcoin.
And then the bombshell purchase of another $1.026 billion or 19,452 bitcoins by MicroStrategy led by CEO, Michael Saylor.
The story makes sense now
So yes, there was a flash crash. Yes, a lot of coins that had not moved in a while, moved. And yes, they moved to new wallets that won't move again for a while.
The important thing to remember is that the price of bitcoin is creating a new and higher bottom every time a large purchase is made. Just as those wallets that suddenly moved their coins that had been sitting dormant for many years and made profits, these newly transferred coins will do the same.
It is important to educate yourself on these topics and to seriously consider stacking sats. Let us know if you need any help.