An investor’s highly leveraged long trade and closure just before President Donald Trump declared a cryptocurrency strategic reserve on Sunday raised speculation of insider trading.
What happened: In an X post, capital markets commentator The Kobeissi Letter highlighted how a whale took a 50x leverage on Bitcoin BTC/USD and Ethereum ETH/USD to turn an investment of $4 million into a $200 million position.
"$200 million of longs (including leverage) is no joke, especially in a market where Bitcoin was down 25%," The Kobeissi Letter said.
The risky move meant that a mere 2% drop in Bitcoin could have liquidated the trader.
Additional data from on-chain tracker Spot On Chain revealed that the trader closed their position shortly before Trump announced a cryptocurrency reserve, including Bitcoin and Ethereum, making a profit of over $6 million.
"Big gamble or insider trading?" Spot On Chain speculated.
See Also: Bitcoin Is Digital Gold But ‘What’s The Rationale For An XRP Reserve’, Asks Peter Schiff: Cardano Founder Charles Hoskinson Says Trump Made The Right Decision
On-chain sleuth and Coinbase executive Conor Grogan investigated the trader's activity and found that the funds came from phishing.
"Turns out he’s just a gambler with stolen funds and not someone with inside info," Grogan said.
Benzinga Note: Leverage trading allows cryptocurrency traders to open larger positions using borrowed capital. While it can potentially amplify profits, it also significantly increases the risk of substantial losses due to the volatile nature of the cryptocurrencies.
Why It Matters: The timing of the transaction raised eyebrows, especially given the subsequent rally of Bitcoin and Ethereum following Trump’s announcement. Bitcoin soared past $95,000, while Ethereum clocked double-digit gains to rise above $2,500.
However, this was not the first time suspicious trading activities have been linked to Trump’s cryptocurrency announcements. In January, a whale had snapped up $5 million in Official Trump TRUMP/USD minutes after Trump claimed ignorance about it.
Price Action: At the time of writing, Bitcoin was exchanging hands at $92,974.58, up 8.19% in the last 24 hours, according to data from Benzinga Pro. Ethereum traded at $2,444.64, following a 9.63% jump.
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