Crypto trader Tyler Swope says Bitcoin whales are increasingly manipulating the market this summer.
“Taking a look at Bitcoin’s price chart over the past two weeks, it’s easy to get a sense of what is currently going on, as the chart is extremely choppy, showing multiple pump and dumps, dump and pumps, and flash crashes galore. This is total manipulation in the range between $9,000 and $11,000, and the whales are initiating and capitalizing on the short-term volatile price swings.”
He points to a sudden drop in the price of Bitcoin across all exchanges on Sunday as the most recent example. After trading above $9,500 all day, the price of Bitcoin suddenly dropped to $9,265 and popped back to $9,507 – all in just over an hour.
According to Swope, the dump was performed on Bitfinex, where the price sank to nearly $9,100.
“Why did this happen? Well, as we know, Bitfinex also has margin trading on their exchange. And the whale probably associated with the exchange pulled off a classic bear trap, wrecking a ton of positions on that exchange. They wanted to liquidate, number one, any longs that would be due for liquidation at that price.
And number two, to lure other less experienced traders into their manipulation, thinking the market was going to start falling off a cliff. Thus, these traders immediately opened short positions on the exchange. The whale then immediately starts buying, forcing traders to close out those positions at a loss.
And this is pretty much exactly what happened. As we can see over the past 24 hours, it is mostly longs that got liquidated. And then, with this chart, you can see the exact time of the flash crash, around 17:00 UTC. Traders on the Bitfinex exchange changed their position, being manipulated by the crash.”
Swope also highlights a number of separate sell orders triggered temporary crashes in the price of Bitcoin in recent weeks.
One of the most well-documented flash crashes in recent weeks was on July 14th, when traders tracked a sale of $15,000 ETH on the crypto exchange Bitstamp. This caused the price of ETH to crash on the exchange and triggered a domino effect on BitMEX, which bases the price of its ETH futures contracts in part on Bitstamp.
Meanwhile, an investigation is underway into another Bitstamp sell-off in May, when a whale is believed to have sold about 5,000 BTC in a single trade, which triggered another flash crash that plunged price of Bitcoin from $7,800 to as low as $6,250 in about 15 minutes.