Over the weekend, seemingly for no real reason, Bitcoin took off sharply and started rising towards $9,000 after struggling to break through and stay above $8,000 in recent days and weeks.
However, preceding this, a Twitter account known as ‘Whale Alert’ started picking up some major movement on the Bitcoin network as a cumulation of about 9 transactions saw 27,029 BTC worth $236 million get moved.
Mostly the moves were between wallets, but one of the transfers was onto an exchange, which gives some interesting insight into what those with a lot of money are thinking at the moment. It also could once again show just how easy it is to manipulate the Bitcoin market with enough capital.
These nine transactions saw a huge amount of money moved in a short period of time, and because of their timing, it would be plausible to tie this market movement to the rise in price of the major cryptocurrency.
One massive Bitcoin holder in particular moved 15,000 BTC worth more than $119 million in a single transfer from one unknown wallet to another.
In those transactions, one of them saw 1,500 BTC moved onto Bitfinex. While it is unclear the reason for taking these funds onto an exchange, it could be very likely that the owner is looking to sell while the prices are again rising for the major cryptocurrency.
If these transactions across the wallets and onto an exchange had enough power to see the entire Bitcoin market – and its related cryptocurrency market – shift by as much as it did, it is actually quite concerning.
Regulators such as the SEC and others have noted that they are skeptical of the cryptocurrency space as it is still so nascent and new, and thus susceptible to market manipulation. This may not be malicious market manipulation, but, if nine transfers can cause a spike of nearly 10 percent, it is a big red flag.
Despite what the whales are doing, it is is noteworthy to see that these kinds of movements from big money movers are causing people to get excited rather than fearful. There has been an entire change in the market sentiment wherein that if that had happened at the peak of the bear market, it could well have caused a sell off.
Bitcoin rose above the $8,000 mark on Tuesday, extending a rally that has seen the digital currency more than double in value since the start of the year.
According to data posted on the website CoinDesk, bitcoin topped $8,325 before giving up some of its gains. Since the start of the year, bitcoin’s value has increased more than 120%.
Bitcoin prices have yet to recover to its all-time highs of around $20,000 in late 2017 when a frenzy of interest from retail investors suddenly sent the value of cryptocurrencies dramatically higher.
Andy Brenner at National Alliance Securities said while it wasn’t possible to confirm who is behind the direct flows of who is buying bitcoin, it looked logical that Chinese investors were using the digital currency as a means to diversify.
“We can see that the bid for bitcoin in this latest run has coincided with a big down tick in the value of the Chinese yuan versus the dollar,” he said Monday in an email to CNBC.
“Negative news is no longer having a negative impact,” Iqbal V. Gandham, UK Managing Director at online trading firm eToro told CNBC by phone Tuesday.
Gandham said the bitcoin price has now hit a base value and now individual stories such as Samsung and HTC phones carrying bitcoin or Amazon marketplaces accepting the digital currency is starting to take effect on consumer acceptance.
Gandham added that rumors that Fidelity Investments, one of the largest asset managers in the world, will soon start crypto trading for institutional customers was also having a postive impact on price.
Meanwhile, digital currency critic David Gerard is ascribing bitcoin’s recent run to trading moves by big holders of the digital currency who are putting the squeeze on short sellers.
In a blog post Monday, Gerard said “Whales” are buying up the market until short positions get forced out. At liquidation, short sellers then buy back at market price forcing a price spike as a wave of buying hits order books at the same time.
Gerard said the whales who guided the price higher then sell off at a profit.
The crypto specialist also linked the rise in bitcoin to an influx of dollar-substitute tokens called “tethers,” which have supposedly been introduced into the digital market to inject liquidity. Tether is owned and run by the same people as crypto exchange Bitfinex.
However major questions exist over how realistically the value of a tether can be linked back to an actual dollar and Bitfinex is being investigated by the New York Attorney General.
Gerard said despite the big questions over the validity of the recent buying spree, he expected bitcoin and other cryptocurrencies to keep going up.
“Mainstream media coverage might lure fresh suckers in with actual cash money, not just tethers. I predicted there would be another mainstream crypto bubble — but I didn’t expect it this soon.”