Bitcoin Volatility Coming? Unknown Whale Transfers 18,900 BTC to Coinbase

Bitcoin’s price traded comfortably above $8,000 on Thursday, as crypto markets saw renewed upside following an extended period of mixed-to-bearish pressure. Investors shouldn’t be surprised if bitcoin sees renewed volatility in the coming days after an unknown whale transferred 18,900 units of the virtual currency to Coinbase.

BTC/USD Update

The bitcoin price peaked at $8,200 on Bitstamp, its highest level of the week. At last check, the leading digital currency was hovering just north of $8,155.

Bitcoin Price
Bitcoin extends rally on Thursday but firm resistance caps gains. | Source: TradingView.

Bitcoin has firm support at the 30-day exponential moving average, a level that has proven its value time and time again. To the upside, BTC is struggling to overcome the upper band of the $8,000-$8,200 resistance. Read more here.

At current levels, bitcoin has a total market capitalization of $143.8 billion, according to CoinMarketCap. The BTC dominance rate has fallen to 55.1%, the lowest in over a month.

Bitcoin Whale Sighting

One of bitcoin’s largest holders could be preparing to make a big splash in the coming days, according to Twitter user Whale Alert. In a Wednesday tweet, Whale Alert confirmed that an unknown wallet had transferred 18,900 BTC to Coinbase. At current prices, that’s equivalent to roughly $154 million.

While 60% of available bitcoin hasn’t moved in at least 12 months, bitcoin whales have been known to influence the market’s short-term trajectory.

Large-scale transfers are often a precursor to greater volatility in the cryptocurrency market. It has been suggested that bitcoin’s 2019 price rally was largely orchestrated by oversized holders short-squeezing the bears. At least two of bitcoin’s large price dumps in recent months have also been attributed to whales. As Forbes recently reported, these movements involve bitcoin whales selling a large amount of BTC and then buying it back at a lower price.

There are many ways bitcoin whales manipulate prices to turn a profit. According to Kitco, one of the most common is the “rinse and repeat cycle.” The process is laid out by Tanzeel Akhtar:

This [rinse and repeat cycle] is when a trader or whale with huge holdings starts selling bitcoins lower than the market rate which causes a panic sell off by small-time traders. The whale will then have sold just below the current market value and enough to watch panic ensue. Then the whale waits and watches the panic selling take place until the Bitcoin prices reach a new low. This is the time when the whales quickly scoop up more Bitcoins hence the term ‘rinse’ and then β€˜repeat.’”

At the same time, there’s no guarantee that the recent transfer was a precursor to a large-scale price dump. Whales rarely just dump their bitcoin holdings, but use them to influence the market’s short-term trajectory. Read more: Bitcoin Whales to the Rescue?

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Charts via TradingView.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi