One enormous ‘Whale” transaction sends Bitcoin community into FUD

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

Bitcoin hodlers are an anxious bunch these days. The industry has been under attack by no less than the President of the United States, his henchmen, and global officials across the globe. Skeptics keep prophesizing that a major correction is imminent, one that will drop BTC values far below any levels that seem conceivable or have been seen in recent history. This concern has led to keeping tabs on any movement whatsoever on the Bitcoin blockchain, just in case it might hint at a major reversal. Any change in a so-called “Whale” account can send shivers down the entire spine of the crypto community.

Just such a transaction occurred on Monday, July 29th. There were actually two individual transactions of significance, but the larger of the two drew all of the attention. One Whale account, one that had been dormant since 2015, was suddenly stirring and on the move. The larger transaction weighed in at 142,323 BTC, roughly equivalent to $1.3 billion. GULP! The reaction was palpable throughout the industry, as speculation ran rampant as to what the source and consequence of such a large a capital move could mean now and shortly thereafter.

The first mention of the massive movement of funds came from Larry Cermak, the director of research at The Block. His tweet read as follows: “Did anyone else notice that a massive whale (likely not an exchange) moved 142,323 BTC yesterday (approximately 12 hours ago). That’s more than $1.3 billion and approximately 0.8% of all bitcoin.” As you might expect, the tweet spread like a California wildfire.

With everyone so sensitive to anything that could suggest that the Bitcoin sky might be falling, it is not surprising that fear, uncertainty, and doubt (FUD) was the immediate reaction. The first suggestion was that possibly the great man himself, Satoshi Nakamoto, had actually decided to cash out in some way or was at least preparing to do so at a later date.

After further investigation, someone in the know hinted that the $1.3 billion transaction, along with an earlier one that amounted to 50,000 BTC, was somehow connected with Xapo, a crypto wallet provider. Earlier this year, Coinbase acquired the firm, and the supposition was that the transfers were related to this acquisition.

Su Zhu, the CEO of Three Arrows Capital, was had come forward and explained that Xapo had more than 700,000 BTC held in its custody account business. The transfers would then make sense as part of a back-office consolidation of accounts and also consistent with the fact that an enormous chuck of these funds had not been moved since 2015 and 2016.

The logical narrative that resulted after further investigation seemed to have calmed the waters of anxiety at the moment, but after a flurry of recent attacks on the industry, it is evident that many investors, enthusiasts, and believers have been on pins and needles of late. There was even talk within a recent U.S. Senate hearing on banking where a senator actually suggested that a total ban of cryptocurrencies in the U.S. should be considered, but he had decided against it, since Bitcoin is already a global phenomenon. A U.S. ban would not achieve anything. Such is the nature of today’s crypto debate.

At the end of the day, the heightened interest in capital movements by “Whales” will continue. One can easily obtain a ranking of BTC accounts by size and notice that the dozen or so of accounts at the top contain hundreds of millions of Dollars, if not billions, and even when you get down to the 100th account, it still has 1,000 BTC, a major fortune that can impact market pricing materially, if and when a sell order is executed. Even if Xapo accounts are being consolidated, the fear of a major sell order still persists.

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