Mysterious Bitcoin Buyer Sends Cryptocurrencies Soaring

Bitcoin prices jumped 15.3 percent Tuesday morning after a large, anonymous buyer placed a $100 million order.

A single $100 million algorithmic order to buy bitcoin was spread across exchanges Coinbase, Kraken and Bitstamp. The orders were placed in increments of 7,000 BTC at a time and triggered a flurry of subsequent trading volume in the cryptocurrency markets.

Why It’s Important

There was no major fundamental news related to bitcoin that triggered the large order.

“The rally seems to be purely technical in nature as BTC crossed a key level of $4,200 and there wasn't any notable news that came out during this time,” said eToro analyst Mati Greenspan.

Bitcoin prices hit their highest level since November, trading at $4,775 on Tuesday morning. Tuesday’s move marks the largest single-day gain for bitcoin since April 2018, but the cryptocurrency remains well off its all-time high price of near $20,000 back in December 2017.

Bitcoin and other cryptocurrencies took a beating in 2018 due to concerns over regulation and security. The U.S. Security and Exchange Commission has yet to approve a cryptocurrency ETF for listing on a major U.S. exchange due to concerns over market liquidity and investor safety. Am estimated $1.7 billion was stolen from cryptocurrency exchanges and investors in 2018, according to cybersecurity firm CypherTrace.

In addition, a March study from Bitwise found that 95 percent of daily bitcoin trading volume on CoinMarketCap.com is faked by unregulated exchanges. The relatively low liquidity makes the cryptocurrency market much more vulnerable to manipulation and volatility, such as Tuesday’s big move.

While the anonymous trader seemed to target only bitcoin, several other cryptocurrencies reacted to the buying volume:

• Bitcoin was up up 15.5 percent to $4,775.
• Ethereum was up 9.8 percent to $156.
• XRP was up 7 percent to 33 cents.
• Litecoin was up 13.4 percent to $68.
• EOS was up 10.8 percent to $4.64.

What’s Next?

Cryptocurrency traders will be watching to see if the big buyer has triggered an extended technical rally in cryptocurrencies. They will also be on the lookout for potential fundamental headlines in the coming days that may have driven the buying.

Despite Tuesday’s rally, the Grayscale Bitcoin Trust (Btc) GBTC is down 52.6 percent overall in the past year.

Related Links:

2018: The Year Of The Bitcoin Bust?

Why The Bitcoin Bubble Is Different From All Other Bubbles