Bitcoin Flash Crash Wipes $1B From Markets’ ‘Estimated Profit’

Crypto traders are out of pocket with exposure to Bitcoin (BTC) using options and futures, with the $1 billion cryptocurrency up more than 14% since hitting a new all-time high of $69,200 on March 5.

Total open interest (OI) on Bitcoin, Ethereum (ETH) and Solana (SOL) exchanges has dropped significantly after BTC hit an all-time high the previous day, writes Santiment, an on-chain analytics provider, in a March 6 blog post. .

Bitcoin open interest decreased by $1.46 billion (-12%) in a few hours, Ether (ETH) decreased by $967 million (-15%), and Solana (SOL) fell by $424 million (-20%).

Bitcoin price briefly hit a new all-time high above $69,200 on March 5, slightly higher than the previous high of $69,044 in November 2021.

Most of the speculation on the price came from traders holding bitcoin above $70,000 and opening long positions, Sentiment said.

Meanwhile, a small portion of the outflow came from short positions with Bitcoin touching a new all-time high.

“In a way, we can view this fall in open interest as a sign that ‘speculative profits' have been temporarily removed from the market.”

Related: Crypto Derivatives Daily Trading Hits All-time High

Open interest refers to the total amount of open positions that traders have taken on a futures contract. When a trader opens a new position on a futures or options contract, open interest increases. It decreases when a trader closes an existing position.

Over the past few weeks, open interest has registered record highs as traders increase their bets on bitcoin's price action as it heads toward new highs.

While Bitcoin's sudden downward price action may have unnerved the market, many researchers have taken X to explain that price movements are a normal part of the process.

Crypto trader Daan Crypto Trades told his 363,000 X followers: “After temporarily clearing all-time highs, we saw a sharp decline as many misses came out. It is lost in this correction.”

“After temporarily clearing the all-time highs, we saw a significant decline as more lengths moved out,” he said.

According to data from Coinglass, over the past 24 hours, 312,500 traders have handled $1.13 billion in total liquidity.

Bitcoin is currently changing hands at $63,600, down 8% from yesterday's all-time high.

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