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Bitcoin Buying Increased Six-fold During ‘Black Thursday’ Price Crash

Coinbase report shows a six-fold increase in Bitcoin buying by retail traders during the 'Black Thursday' price crash of mid-March.
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Data from Coinbase shows that despite the Bitcoin (BTC) price crash of ‘Black Thursday’ (March 12, 2020) saw even more Bitcoin buying on its platform.

The top-ranked cryptocurrency has since posted a significant recovery from its drop to $3,800 with bullish sentiment presenting the case for BTC reaching $7,800, which might set the stage for a sustained upward push after the block reward halving coming up in a few weeks.

Bitcoin Buying Increased on Coinbase in mid-March

According to the Coinbase report published on Monday (March 30, 2020), amid the Black Thursday flash crash, the witnessed its highest Bitcoin buying numbers in the last 12 months. Data from the report shows that retail Bitcoin buying on Coinbase increased six-fold during the price decline with trading activity surging by 3.5 times the usual level.

An excerpt from the report reads:

“But beyond just a rush, two things are clear: customers of our retail brokerage were buyers during the drop, and Bitcoin was the clear favorite. Our customers typically buy 60% more than they sell but during the crash this jumped to 67%, taking advantage of market troughs and representing strong demand for crypto assets even during extreme volatility.”

The increased traction was not only restricted to Bitcoin buying as Ethereum (ETH) and XRP also saw a significant surge in retail purchasing during the 48-hour period that saw prices decline by more than 50%.

For Coinbase, the actions of its retail users constitute a recognition of the fact that the price crash presented a unique Bitcoin buying opportunity or as it is more colloquially known, “buying the dip.”

In total, the Coinbase report showed that retail traders on its platform deposited more than $1.3 billion in cash and cryptos to buy Bitcoin and other virtual currencies during the price crash. New user registration also reportedly increased during the period with the exchange platform reporting a 100% growth in the 48-hour period.

Over-leveraged Positions Contributed to mid-March Bitcoin Slump

Coinbase also touched on the circumstances that led to the massive Bitcoin price crash, highlighting the issues caused by over-leveraged positions especially on exchanges domiciled in jurisdictions with lax regulations.

Popular crypto trading service BitMEX which was at the center of the storm during the events of Black Thursday allows users to open positions with leverage as high as 100x.

Usually, with such high margin trading, a small percentage shift in the price action of the underlying asset can cause a cascade of forced liquidations. Thus, with the World Health Organization (WHO) declaring COVID-19 to be a pandemic, panic ensued in the market as investors moved towards massive selloffs.

Bitcoin was not excluded from the initial panic as later reports show institutional traders electing to dump their BTC for cash amid the wider market panic. This increase in selling pressure meant that longs on platforms like BitMEX were wiped out and exchanges whose price discovery depends on such platforms saw their quoted spot price fall dramatically as well.

Since the events of mid-March, Bitcoin has tried to mount an assault above $7,000 but has seen successive attempts fail to hold above the major resistance point. However, some price indicators have begun to flip bullish, probably indicating the possibility of the top-ranked cryptocurrency finally able to achieve some sustained upward momentum.

With Q2 2020 about to get underway, the top-ranked cryptocurrency is still down 10% from its price at the start of the year.

While short-term uncertainty still prevails, some pundits say Bitcoin is poised to be the investment asset of choice for millennials over the coming years as boomers pass on their wealth to the younger generation.



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Osato is a Bitcoin enthusiast who can often be found providing insight on the latest Bitcoin-related news. When he isn't closely monitoring stories in the industry, he is either attempting to beat his scrabble high score or internally debating some existential dilemma. Contact Osato@Blockonomi.com

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