Bitcoin Reverses Powell Spike With a Flash Crash as Options Market Signals Jitters Ahead

Bitcoin (BTC) fell below $111,000 during the overnight trade, reversing Friday’s spike caused by Fed Chair Powell’s dovish speech, as a whale sold into illiquid market conditions.

The cryptocurrency’s price fell by over 2% from $114,666 to $112,546 in under ten minutes to 07:40 UTC. The so-called flash crash occurred when a single whale sold 24,000 BTC, worth over $300 million, according to blockchain data firm Timechainindex.com.

“This entity liquidated their entire 24,000 balance, sending all of it to Hyperunite. They transferred 12,000 just today and are still actively selling, which is likely contributing to the ongoing price drop,” the firm’s researcher Sani said on X, adding that the whale still holds a total of 152,874 BTC across all associated addresses, including 5,266 BTC.

“The funds originally came from HTX about six years ago and had remained inactive until recent transactions involving one of their addresses containing approximately 24,000 BTC,” Sani noted.

Prices eventually hit lows under $111,000 before recovering to trade near $112,800 as of writing, according to CoinDesk data.

Powel spike reversed

The price drop has erased gains seen after Friday, after the Fed Chair Jerome Powell appeared to support the idea of rate cuts, while playing down the long-term inflationary impact of President Trump’s tariffs during his annual speech at Jackson Hole.

The so-called dovish speech saw BTC rally nearly 4% from $112,500 to $116,900 alongside a risk-on rally in U.S. stocks and the decline in the dollar index.

Over the weekend, the analyst community expressed confidence that a rate cut would occur in September, potentially leading to new all-time highs in bitcoin and ether.

Options disagree

The Deribit-listed bitcoin options reveal a lingering risk aversion, according to data tracked by Amberdata.

Specifically, the 25-delta risk reversals, a measure of investor sentiment comparing calls to puts, continue to trade in the negative territory through the December expiry, reflecting hedging activity and a bearish title.

A negative risk reversal means that put options, which offer insurance against price declines, are more expensive than call options.

In other words, despite the so-called dovish pivot by Powell, BTC options traders continue to price in uncertainty, bracing for a potential downside volatility.

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