“Bearwhale” Makes Bitcoin Trading History

bearwhale bitcoin
The bearwhale begins in bitcoin as Monday shows up.

This sell order took place in the bitcoin market the past few trading days. indicators showed a large sell order this weekend. Blockchain (Bitcoin’s built-in ledger system) showed that a single sell of 30,000 Bitcoin all at once at a price of $300 per coin (or $9 million in total) took place. Many people have been speculating on the specific nature of this trade, where it came from, who did it, what was it’s affect on the market. The graphic above attempts to illustrate the exact nature of how strange it was. For the first time in bitcoin history, market manipulation has saved the cryptocurrency from further falling. The price of bitcoin is based solely on demand, speculation is nature of the actual price of a bitcoin. Ever since 2009, bitcoin has been ahead of the centralized banking system, allowing people to use a currency without a name. Bitcoin has now become a household name and is expanding it’s financial seriousness worldwide with options, futures, and other (risky), but modern means of utilizing the cryptocurrency, taking it to another level.

As the internet continues to absorb the varied nature of cryptocurrencies, a community has evolved. Around Monday morning in Europe and very early morning in America, a huge order selling 30k bitcoin at 300$ was made in a serious of small orders, which defined the price for hours to come. The internet got right to it by creating a nickname for this large bitcoin order, which unloaded such a large amounts of bitcoin, no one saw it coming. People started to chomp away at the order, before it was completed, stopping the months long decline of BTC/USD.

http://nymag.com/daily/intelligencer/2014/10/bearwhale-is-freaking-out-the-bitcoin-markets.html

This is almost definitely a bot driven order using spread orders, which break large orders into smaller ones to maximize the sale of the order and maximize profit. If someone was selling 30k bitcoin in whole, it would have probably had the opposite affect. The bot might have executed this because of the client’s stop loss protection, at 300. Makes one think, who had this many bitcoin, and if they lost faith in the currency should we cash out. But this order had a ripple effect on the entire nature of the currency, affecting prices on all exchanges. Some would say the order was issued by Vitalik Buterin, a cryptocurrency blogger and investor. On Friday he said he would be selling a large amount of bitcoin in order to pursue other projects, as defined by etherum. You can see his blog post here:
Others speculated it was bitcoin merchant processors for large sites like tigerdirect or overstock.com which give the merchants USD and lower their credit fees in order to keep profits higher. This seems reasonable enough, since they “are too big to fail” they have the problem that they can manipulate market pricing with their holdngs. Others speculate in a reddit discussion that a single early adopter was unloading  his/her stockpile of bitcoin in the link below:

The jury is still out on whether this was due to a single person, a group of traders, or any group for that matter behind this event. It also remains to be seen what the intention of this mass unloading of bitcoin is. Again was it simply a single early adopter clever enough to get in early, that now is executing their exit strategy with a massive liquidity event cashing in their chips? Another theory has the U.S. or even Tim Draper selling the seized Silk Road coins about a year ago, totalling roughly 30,000 coins according to sources. These most likely are just highly speculative theories like a campfire tall tale.

http://www.reddit.com/r/Bitcoin/comments/2ieqn4/bear_whale_cashing_out/

This market in current form was having a difficult time handling the high amount of coins being sold all at once, resulting in price decline action really quickly. The liquidity to absorb and facilitate this large of a sell block all at once is simply is not there yet in current form and caused some price action irregularities. This entity listed the coins at $300 and buyers couldn’t bring the price above this level, they had to buy about 30,000 bitcoins to move the price on the order book through the wall.

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http://www.reddit.com/r/BitcoinMarkets/comments/2iensb/how_to_make_money_off_bearwhale/

Stay tuned for more as developments as they arise. The likelihood of more BearWhales remains to be seen, ranging from uncertainty to relatively high and everywhere in the middle. It is uncertain as to whether the market could chew through another or even multiple BearWhales at a time. It remains to be seen how future episodes of these kinds of events will affect trading patterns when they occur and how it will impact confidence.