Bitcoin price collapsed on December 4th, losing $ 16,000 in a matter of hours, and the rest of the market followed suit. CryptoQuant, a blockchain analytics company, reveals that there were a number of developments in the chain before this massive crash.

Three elements on the chain

Yesterday, BTC plummeted from a daily high of $ 58,000 to $ 42,000, making it one of the worst crashes in USD. While investors are looking at global developments for reasons like more concerns about the new COVID-19 variant and the sell-off in the stock markets, CryptoQuant has found one main reason.

The first is the number of bitcoins on the exchanges that skyrocketed a few hours before the slump. The index has fallen steadily over the past few months, leading to new lows. However, as the graphic below shows, over 45,000 bitcoins were deposited on exchanges in a single day.

Source: CryptoQuant

Second, the analytics firm released the Estimated Leverage Ratio indicator, which tracks the relationship between Open Interest (OI) and BTC balance across all exchanges. Essentially, this metric shows that investors’ debt also rose a few hours before the crash.

As can be seen, traders with excessive leverage paid a heavy price as the total amount of liquidation on a daily basis exceeded $ 2.5 billion.

Source: CryptoQuant

The third metric is the Exchange Whale Ratio, which is “the number of BTCs transferred daily to the exchanges of the top 10 flows in relation to the total amount transferred”. According to CryptoQuant, the indicator tends to stay below 85% during a bull market, while an increase above 85 indicates strong selling pressure from whales.

Interestingly, it has held up over 85% in the past few weeks and has even increased to 90% in the past few days.

Source: CryptoQuant

What has changed?

Such a large drop in prices in such a short period of time has led to other unusual activity. For example, the Coinbase Premium Index, which shows the difference between the price of Bitcoin on the largest US stock exchange and others, has skyrocketed.

Usually, the higher the premium, the stronger the pressure to buy spots on Coinbase. Interestingly, Ethereum’s premium also rose.

Source: CryptoQuant

Wu Blockchain also outlined the premium on South Korean exchanges, which the analyst describes as a playground for retail investors. As the figure below shows, this metric is also rising rapidly, suggesting that retail investors are also flocking to hit the bottom.

Source: CryptoQuant

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