In this article we are going to discuss the recent Bitcoin price movements, what could be effecting these movements, and why a whale may want to pump the Bitcoin price right now.
Nothing should be considered as financial or Investment advice. Enjoy the ride.
Bitcoin Price Movement
This week, Bitcoin dipped below $10,000 for the first time since mid June. The amazing run Bitcoin has been on since the start of April has lead to almost massive gains for those that bought near the bottom between $3,000 and $4,000 per Bitcoin. Many people believed heavily that Bitcoin would not even surpass the $6,400 dollar resistance level on the way up, but as we saw that was not a problem for the old veteran.
Now, the challenge is for the bulls to keep Bitcoin above $10,000 long enough for the altcoins to pump and support these new prices levels. Currently, altcoins are moving in the wrong direction with many seeing decreases greater than the drop in Bitcoin price. Likewise, the altcoins also refused to pump as much as Bitcoin on the way up.
This decoupling of the direct movement for Bitcoin and the altcoins has lead many bag holders confused and frustrated as the market moves without reaction from many projects.
Bitcoin Back to $10,000
Most importantly, Bitcoin started to fall organically as buy pressure subsided over the past several weeks. Out of not where, a large whale made an outlandish purchase on Binance that moved the price around $1,000 pushing Bitcoin back over the $10,000 level. This move was dramatic, because a majority of the market expected Bitcoin to continually retrace downward. This movement upward seems to only be predicted by the Bitcoin Longs.
Traditionally, when there is a surplus of investors holding one position over the other, there will be a sharp price movement in the other direction forcing liquidation. This liquidation of positions enables the exchanges to capture investors assets and burn through some of the market, churn and burn tactics. This creates room for new investors, moves the market, and increase volume short-term.
Outside Speculation From Congressional Hearings
It would not be far-fetched to assume the congressional hearing over Facebook’s proposed digital asset, Libra, had a impact to the recent Bitcoin price movement. Ironically, the discussion on Libra has directly lead to congress discussing and projecting their opinions over all crypto assets, namely Bitcoin. Due to this and the fact that multiple representatives have praised Bitcoin’s immutability, utility, and social impact, new investors could be actively entering the market creating a sharp decrease in OTC supply once again.
Any large investor looking to buy Bitcoin would naturally try to obtain Bitcoin over the counter as to not move the market during the purchase. This enables the investor to buy their Bitcoin in bulk and preferably at market price. When there is a large purchase on an exchange, they run the chance of inflating the price during the purchase and paying more than they originally intended.
The other side of the coin could negate everything stated above. There is still prevalent market manipulation causing a majority of the price movements in the industry. A whale could easily be propping up the market to get new money to FOMO into cryptocurrency once again. This would effectively inflate prices to new highs as seen now and set the market up for another flash crash. Investors should be very weary if the market position moves to majority short on Bitfinex and Bitmex.
This purpose of a movement on the market like this could be for multiple reasons:
- Inflate prices to sell off a large amount of BTC at higher prices
- Pump the market to increase net worth and their portfolio leverage. Think debt to equity ratios and lending profitability
- Setting up for a flash crash to bring altcoins and potentially Bitcoin to new all time lows by hyper inflating the price short term
Other reasons for keeping the BTC price up could include:
- Keep Bitcoin price high for trading fees and exchange profitability
- Miners hoarding supply to artificially increase price and drive demand to increase mining profitability
- Organized pumps to create speculative healthy market periods during congressional meetings
Whatever the reasoning behind the constant pump and level support, these movements are not natural. Given Bitcoin historically experiences wild swings of volatility, investors should not FOMO into the market. The best course of action, speculatively, is to continually dollar cost average in and ride out the waves.