Bitcoin takes second major dive in a week – Whales flexing their muscles

Two academics contend 2017 Bitcoin bubble due to Whale’s manipulation

Bitcoin took it on the chin a second time in a week, plummeting 14% from $8,500 and change to $7,700, perhaps, from a sucker punch from a Whale dumping a large sell order on the market. For a second time, however, Bitcoin demonstrated its newfound resilience and climbed up off the canvas. It now rests just below $8,000, taking a much-needed breather after the bell rang on what was a tumultuous round in these early morning hours. The chart below provides the blow-by-blow details:

Analysts have been chorusing two common themes over the past few weeks. One is that it was time for a major correction. A review of the historical record has revealed that during its last meteoric rise, which culminated in its all time high just beneath $20,000, BTC recorded no less than “nine 30%+ pullbacks from last cycle accumulation & uptrend”. Several reputable analysts have predicted that a correction was imminent, especially if Bitcoin could not hold the line at $8,200 or so. Last night was another subtle reminder that a few analysts may know what they are talking about.

The second point of consensus was that, after a material correction, Bitcoin would then be free to attack the $9,000 level with restored vigor, BUT it would encounter enormous resistance above that price point from substantial Whale account hodlers, which were positioned to take profits in that region. A few observers have already noted that last night’s price action confirmed this line of reasoning, as well.

Crypto enthusiasts are very active on social media platforms, including Twitter and Reddit, but they also know how to jump into the blockchain and search about for answers. Per one user on Reddit: “About 20-30 mins before the dump, a whale moved 25k BTC (worth $215M) to Coinbase. About an hour after the dump, a whale moved 14k BTC (worth $112M) from Coinbase to another wallet.”

The presumption is that 11k BTC (worth $88M) were sold immediately on the market, swamping Coinbase and driving the bid price down to $7,700. There was no mention of what happened with the remaining 14k of BTC. Was this event an indication of a coordinated strategy where this Whale and/or his companions scooped up cheap BTC at bargain prices? In other words, have Whales learned how easy it is to manipulate crypto price behavior by flexing their muscles whenever and wherever they wish?

A 14% drop, however, is by no means a 30%+ correction. A move of that proportion would have send BTC down to $6,000, a level where a multitude of buy orders reside, just waiting for the last chance to buy Bitcoin before it is too late. Josh Rager, a crypto analyst that has been quoted frequently of late regarding the need for a correction, noted that: “Bitcoin continues to push down quite aggressively and would like to see a move above $7824 and hold. Eyeing that previous CME futures gap that wasn’t explored at $7175. If Bulls don’t step in, I believe the price is heading that way.”

What are other analysts and traders saying? Here are a few notable snippets:

 

  • Timothy Tam, co-founder and chief executive at CoinFi, a cryptocurrency research firm in Hong Kong: “It just got a little bit extended, this is a healthy retracement. There’s quite a lot of volume going through, this is normal Bitcoin volatility. At the end of the day it still doesn’t take a lot of money to move these markets compared with traditional markets.”
  • Ali Martinez, CryptoSlate’s market analyst, “Bitcoin could be preparing for a correction that could take its market valuation down to around $6,000. A reversal candlestick pattern that formed last week and a combination of the TD Sequential Indicator, the RSI and the StochRSI are all indicating that a pullback is likely.”
  • Crypto Quantamental, an experienced Wall Street portfolio manager: “For those that weren’t around in the bull market in 2017, these sorts of drawdowns are normal and to be expected. Bitcoin is insanely volatile and will test your will. I’m not saying we are in a big “BULL”, but if it is, expect this.”
  • One anonymous trader: “I’d be a lot more confident in the markets after a hard reset. Price action is starting to feel quite lethargic. I’m not strong bearish, but I’m also not feeling particularly bullish up here. It’s not a bad time to risk off from this rally.”
  • TheCryptoMonk, an analyst with a large Twitter following: “Too early and trapped with a fakeout. Overall I still believe BTC is going for $9k. As explained by many, the weekly candle marks an indecisive market. Not specifically bearish or bullish.”

From an overall perspective, the mood is one of caution, both cautiously optimistic and cautiously bearish. Whatever the case may be, if movements of the Whales are truly the root of the current disruption and if they are truly poised just above $9,000, then tread softly in those Whale-infested waters. As of this writing, the mood of the market is changing once more. BTC tested the $7,500 support level, rose back to $7,750, and analysts view the drop as a bearish signal and counsel against buying on this dip. There is no certainty as to next moves. It may be time to buckle up and bunker down. Stormy times may be ahead.

 

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