Some bitcoin addresses are watched constantly for activity. One of the addresses on bitcoin’s top 20 “rich list” just did something strange: it suddenly moved 66,233 BTC after four years of inactivity.
The address (1EBHA1ckUWzNKN7BMfDwGTx6GKEbADUozX) has been inactive and accruing bitcoin since 2014. It’s one of the top 20 wealthiest bitcoin addresses on the planet.
The $257 million movement was first spotted by Crypto Potato, which shared the story in a blog post. Crypto Potato spotted the transaction when it was first unconfirmed. Now, that transaction has received 16 confirmations.
You can view the enormous transaction here: blockchain.com/btc/tx/244c71c790eb327eb8bbf66aa2d0a75bac7c1fe7b55d1161c316c6f93292d376.
The destination of the funds is unknown. However, one user on Reddit spotted the funds arriving in another unknown address for an unknown purpose:
“Looks like its being thrown about everywhere and ending up back in groups… heres one – https://chain.so/address/BTC/1EDRfeNkjkH2SAhSbEKzhKuabnEbVWbKEp,”
said /u/xhale2007 on Reddit’s /r/Cryptocurrency.
You can view that 8,000 BTC chunk here: chain.so/address/BTC/1EDRfeNkjkH2SAhSbEKzhKuabnEbVWbKEp.
Other destination addresses have also been spotted, although none of the addresses have been confirmed and none of the addresses are for known exchange wallets.
This Is A Serious And Significant Movement That Could Have Catastrophic Effects
It’s true that large transactions take place in the crypto community every day. However, this transaction is particularly large.
To put this into perspective, $257 million is larger than the 24 hour trading volume of all but the largest crypto exchanges. It’s more than what was transferred yesterday on Binance or Bittrex ($205 million was traded on Binance over the last 24 hours).
Ideally, this is a movement of coins for an OTC trade or for an exchange’s own reserves. However, the crypto community is in a frenzy of speculation about what this movement means for the future of bitcoin.
The User Paid A Transaction Fee Of $43
In the modern financial world, sending a $257 million sum for $43 is unthinkable.
In the bitcoin world, it’s expensive.
Yes, the mysterious owner of the wallet sent $257 million for a measly transaction fee of $43. The transaction was divided into multiple SegWit addresses, possibly making it more difficult to trace the funds.
What Happens Next? Is A Dump Incoming?
A movement of $257 million is enough to crash the price of bitcoin overnight. It seems unlikely, however, that this is a whale cashing out. Why cash out now when prices are at a one-year low? Why clean out the entire wallet instead of just half?
The most likely reason is that this is an OTC trade. OTC trades are facilitated by exchanges that match high-volume sellers with high-volume buyers. Ordinarily, selling 66,233 BTC would sink a market and you would be trading against your position. With over the counter (OTC) trading, however, the trade doesn’t have to sink the market because the OTC trading desk connects you with someone who wants to buy those 66,233 BTC at an agreed rate.
OTC trades are kept off an exchange’s main orderbooks to prevent the seller from trading against the trade.
The other possible reason for this movement is that this is an exchange moving coins around. However, the fact that there has been no account activity since 2014 makes that seem unlikely.
Of course, if this is a “worst case scenario” situation and the user is cashing out everything, then it will be very bad for the crypto community. A sudden sale of $257 million of bitcoin would push the price of BTC even further below its current mark. It would drop BTC below $3,000 immediately.
Some believe this is even a calculated price manipulation: someone is going “all-in” to depress the price of bitcoin in the hopes that they can buy bitcoin at a cheaper rate. In that case, the person might not even have to sell their 66,000 BTC: they could just transfer the money around to freak out the market, buy bitcoin at a 10% discount, then transfer the money back and cackle at the stupidity of it all.
The real question I want to know is: how many times would you confirm the receiving address before sending a $257 million transaction?