Yesterday, Bitcoin broke above $10,000 with a $1,500 daily price candle and a push to above $11,400 at the high. During the rally, however, there was evidence of a whale manipulating the crypto market for maximum profit.
Was this whale responsible for the Bitcoin pump, or were they simply well prepared in advance to take advantage of any major market movements?
Strategic Whale Makes Big Splash, Bigger Profit From Bitcoin Market Manipulation
Bitcoin price had been trading in a tight, sideways range for three months, but this week finally broke free and released pent up momentum. The rally propelled Bitcoin through resistance at $10,500 with ease, sending the crypto asset rocketing higher above $11,000 and beyond.
At the daily peak, BTCUSD had tapped $11,419 on Coinbase Pro. It was that exchange that was potentially used as part of a whale’s sinister strategy to capitalize on the pump by manipulating the market.
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Whales and other market makers have the ability to move the market with their large-sized positions and enormous capital. One particular whale was spotted late in yesterday’s Bitcoin surge, using the index price of Bitcoin to make a huge splash on a completely different exchange.
According to order book data from crypto derivatives trading platform BitMEX, a whale was seen going short $44 million worth of BTC across 22 separate orders.
Sell 44 million over 22 separate orders on mex. Get into posistion.
Then, market dump 1000 coins on Coinbase with max slippage to move index price.
I think we just saw someone do some crazy shit and make a ton of money. pic.twitter.com/5OkCX9KmjO
— lowstrife (@lowstrife) July 27, 2020
Moments after the position was filled to the whale’s satisfaction, a 1000 BTC market dump took place on Coinbase Pro, causing the BitMEX index price to crash.
BitMEX, a derivatives platform, utilizes a funding method tied to an index price that pulls from multiple sources such as crypto exchanges. If the price of the index deviates from spot price on these platforms, funding will adjust until the index price comes back to equilibrium.
But because BitMEX index price is based on Coinbase Pro and other platforms, it can be used to the right strategic actor’s advantage.
While it is impossible to know for certain, that appears precisely what took place. Such a sizeable leveraged short position coinciding with the rejection from above $11,400 could have led to substantial profits being made.
Bitcoin BTCUSD Whale Manipulation | Source: TradingView
The initial rejection dropped Bitcoin’s price back to $10,800. Short orders began filling from $11,000 and up.
This isn’t the first time a single whale or strategic actor has been speculated to be responsible for a major Bitcoin pump. Back in April 2019, research showed that the rally may have been the result of a single actor with well-timed buy orders on multiple exchanges during the late, low-volume hours of the night.
That pump took Bitcoin from $4,000 to $14,000 before it reversed, with whatever whale behind it taking profits all the way up.
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If the last time around is any indication of what’s to come, this pump may only be just beginning, and this whale will strategically take the largest amount of profit using manipulation at each major pullback.