With the current market recovering from the recent Bitcoin [BTC] pull back dragging the price of Bitcoin under $7,500, a hunt has ensued for the source. Bitstamp, the Japanese cryptocurrency exchange which saw a crucial order set tremors in the market is the touted source, however, some dispute this claim.
Correction or Manipulation?
The term “manipulation” has also been thrown around in light of the news breaking out that a massive sell order of around 5,000 BTC was placed on Bitstamp. The order was executed at a low price of $6,200, while the market price of the coin was well above $8,000, causing the decline.
Bitstamp’s deterrent catalyzed BitMEX’s rampant liquidation of over $207 million long positions. Since the latter’s price index comprised of the weighted price of BTC on Bitstamp and Coinbase Pro, BitMEX prices also briefly crashed.
Manipulation rumors were fuelled by the individual nature of the transaction that triggered the crash. Furthermore, given that the April ascendance over $5,000 was purported to be initiated by a single automatic buy order of a substantial amount of Bitcoins, manipulation rumors cannot be waived off.
Dovey Wan, the co-founder of Primitive Ventures referred to the person behind the event as a “jackass” who “put up an aggregated sell of 5,000 $BTC on [Bit]stamp”.
Regardless of the similarity between the culprit to a farm animal, the objective of the pullback, whether it was planned or down to market forces has not been determined yet, but notable analysts have thrown their hat into the ring, suggesting no foul-play.
Weiss Ratings, the crypto-specific rankings company, which, at times has rubbed the cryptocurrency industry the wrong way on predictions, suggested an absence of “manipulation” and termed the fiasco as a “normal market correction”. Citing and then immediately dismissing the Bitstamp case, Weiss laid emphasis on the time of the crash.
The rating giant stated that the price of the king coin was dropping “25hrs BEFORE” the Bitstamp sell order of 5,000 BTC at the low-low price of $6,200; hence this is not a case of manipulation, rather a plain old market correction. Their May 17 tweet read:
“Today, the price of #Bitcoin abruptly sank more than 20%. Some say this was due to manipulation. #BTC had been going down for 25hrs BEFORE the big order hit at #Bitstamp. This isn’t manipulation – it’s a normal market correction. #crypto #cryptocurrency #altcoins”
No doubt that the Bitstamp order hit the market hard, given the gravity of the exchange and the severity of the order, not to mention the consequences it had on the BTC-BitMEX market. However, the top cryptocurrency managed to hold firm above $7,000 and is now well over the $7,300 mark and moving upwards.
Whether it was a “jackass” induced price manipulation or a periodic market correction, the pullback is looking to subside with the king coin posting a 1.2 percent gain in price against the dollar in the past 24 hours.
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Wall Street is on the losing side of Bitcoin’s impressive price rally
Wall Street, complete in their tailored suits, suede shoes, and leather briefcases, have once again placed their bets against Bitcoin.
Despite the fact that the collective cryptocurrency market broke the $350 billion mark, with Bitcoin alone accounting for 62 percent of the same and trading at $2,000 over its price at the beginning of the week, hedge funds were not impressed.
The Wall Street Journal citing data from the Commodity Futures Trading Commission reported that crypto-vested managers were holding 14 percent short positions more than long ones on the now, primary avenue for BTC Futures contracts, the Chicago Mercantile Exchange [CME].
A key point to remember here is that CME contracts are cash-settled and hence, no Bitcoins are actually being transferred, with the traders simply placing bets on the cash-equivalent price of Bitcoin.
Well-suited hedge fund owners however weren’t alone, with other stakeholders excluding the small scale crypto-investors holding a 3x on short positions, indicating a further pessimistic sentiment.
Smaller investors were however, long on the BTC market, with the CFTC report stating that investors holding 25 BTC or less were holding four times the long positions as their more exuberant counterparts. It should be noted that the CFTC report was prepared as the price of Bitcoin was still in the $9,000 range, prior to the five-figure surge.
BitMEX, a popular cryptocurrency exchange offering derivatives trading services, saw over $64.38 million in shorts liquidated when Bitcoin broke $10,000. The same was replicated when the price shot past $12,000.
Short positions indicate not just a sheepish position, but rather an investors’ contractual affirmation that the price of an asset will more likely fall than rise. Long positions on the other hand, indicate a pessimistic point of view. Hence, based on Wall Street’s trading activity, institutions are not buoyant about the cryptocurrency market.
In what could be a reverse-catalyst for the digital assets industry, Bitcoin decided to use this negativity as fuel to breach $11,000 earlier this week. Not done with the Wall Street bears just yet, BTC pumped yet again on June 26, with the price breaking the $12,000 ceiling with a further climb to $13,000 looking likely.
Who said Coin Street doesn’t go past the Wall Street express lane?
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