Research has emerged indicating the cause of the dramatic April 2nd Bitcoin price hike.
The report suggests a single actor traded long for US$100 million.
The trade may have been executed at a certain time to achieve “maximum impact.”
CoinMetrics, a crypto market data provider, recently compiled a report around the sudden upwards movement of Bitcoin’s price on April 2, 2019.
Within an hour, the price of the digital currency leapt from US$4200 to $5000, leaving many market makers scratching their heads.
At the time, one theory was that an April Fool’s Day prank published by Finance Magnates was responsible for the sudden price jump.
The article, titled “SEC Drops the Bomb: Approves Bitcoin ETFs”, led many of its readers to believe that the SEC had approved the Van Eck and Bitwise ETF applications. An April Fools! qualifier was later added to the title to prevent further confusion.
The April Fool’s theory has been largely dismissed within the crypto community and many believe it was simply ‘Bitcoin’s time.’
Analysis on several fronts found that the Bitcoin market was ripe for a pump, due to the lack of movement since December of 2018.
The build-up to the jump
According to Mati Greenspan, a senior market analyst at eToro, the move was indicative of Bitcoin’s rising adoption.
“Throughout this crypto winter that we’ve seen over the last year, we’ve actually seen the industry growing at a rapid pace,” Mr Greenspan said.
The $4200 level was also a key resistance that was being monitored by traders, which left the market ready to move upwards in price.
A whale’s planned move
Further research found that these buy orders were triggered by a single large trade made by a “single committed actor”.
According to CoinMetrics, the trade was also executed at a time that “maximised price impact”.
The price movement began at 4:30 UTC, as shown by the chart above. This is a time where global liquidity is at a low, which would allow for huge price movements to occur with relative ease.
“Large trades were observed on HitBTC’s BTC-USDT market immediately prior to the price movement, although we cannot rule out wash trading at HitBTC,” CoinMetrics said.
“Large trades were then observed on Coinbase’s BTC-USD market followed by Bitfinex’s BTC-USD market.”
This information allowed the firm to trace back the price movement to HitBTC’s Bitcoin-Tether market. Reportedly, there was a matched trade of 122 BTC, which equated to approximately 500,000 USDT.
The data provider also posted animated graphs of the price movement, which showed the three exchanges in question moving quickly upwards after a period of reduced trading volume.
A concerted move across multiple exchanges
London-based analysis firm TokenAnalyst also found that there was a coordinated move across multiple exchanges.
The firm’s co-founder Sid Shekhar says they tracked the flow of transactions on the Bitcoin blockchain to get a sense of the movements before they happened.
After a “few large whale movements of funds”, smaller accounts representing retail investors and trading algorithms began joining the inflow of money.
This led to a ‘domino effect’ across markets, helped by the concerted uptick in all markets.
According to Shekhar, there was “intent” behind the move. He said “players who have been hoarding up Bitcoin wanted to pump up the value of their holdings.”