Bitcoin Flash Crashes After Whale Sell-Off Erases Powell-Induced Gains

Bitcoin’s price experienced a sharp decline Sunday as a large holder offloaded 24,000 BTC into thin liquidity, wiping out gains triggered by Federal Reserve Chair Jerome Powell’s dovish remarks on Friday.

The leading cryptocurrency plunged over 2% in less than ten minutes—from $114,666 to $112,546—by 07:40 UTC, eventually touching lows below $111,000. The rapid sell-off was traced to a single whale transaction involving more than $300 million worth of BTC, according to blockchain analytics firm Timechainindex.com.

“This entity sent their entire 24,000 BTC balance to Hyperunite, transferring 12,000 BTC today alone, and continues to sell,” said Timechainindex researcher Sani on X. He noted the seller still controls a total of 152,874 BTC across associated addresses, including an active wallet holding 5,266 BTC.

Sani also pointed out the coins originated from HTX roughly six years ago and had remained dormant until now. The sudden revival of these funds and their mass movement onto exchanges likely contributed to the flash crash.

As of publication, bitcoin had recovered slightly and was trading near $112,800, per CoinDesk data.

Powell’s Rally Fizzles

Friday’s bullish momentum stemmed from Powell’s Jackson Hole address, where he appeared supportive of potential rate cuts while downplaying the long-term inflationary effects of former President Trump’s tariff policies. The dovish tone sparked a rally across risk assets, with BTC climbing nearly 4% from $112,500 to $116,900. U.S. equities also gained, and the dollar index slipped.

The weekend saw a number of analysts project that the Fed could lower interest rates as early as September—a move that could have propelled bitcoin and ether toward new all-time highs. However, Sunday’s whale-triggered dump wiped out most of that optimism, at least in spot markets.

Options Market Signals Ongoing Nervousness

Despite Powell’s dovish pivot, derivatives traders remain cautious. Bitcoin options listed on Deribit reflect persistent risk aversion, according to data from Amberdata.

The 25-delta risk reversals—a key gauge comparing demand for call vs. put options—remain negative through the December expiry. This suggests a continued preference for protective puts, which act as insurance against downside moves.

A negative reading indicates that puts are commanding higher premiums than calls, a clear sign that traders are still hedging against potential volatility and further downside—despite the upbeat macro backdrop.

In summary, while Powell’s comments initially sparked optimism, the fragility of market liquidity and persistent bearish sentiment in the options market have kept bitcoin under pressure, highlighting the complex dynamics currently at play.