Was Bitcoin Price’s 19% Dump a Manipulation?
- A $1,350 dump led by Bitstamp, Crypto exchange starts an immediate case investigation
- BTC price back above $7,000
On May 16th, Bitcoin price went from above $8,300 – the highest level in 10 months – to just below $6,200. The drop of 19 percent has been one of the biggest one day loss BTC ever saw.
So, what led to this drop?
As we reported, the drop was first triggered on Bitstamp exchange which took to Twitter yesterday to point out the reason behind this being a large sell order of 3000 BTC.
“A large sell order was executed on our BTC/USD pair today, strongly impacting the order book. Our system behaved as designed, processing and fulfilling the client’s order as it was received.”
In just under 12 minutes, BTC lost about $1,350 leading to a $250M long squeeze on BitMEX. Bitstamp along with Coinbase is one of the two exchanges that is used to determine the index price of Bitcoin on BitMEX where the longs got squeezed and as a result, the price of Bitcoin got pushed further down on other exchanges.
The importance of an institutional grade #bitcoin index: On May 16th prices declined ~19% on @Bitstamp. As designed, the XBX Index de-weighted Bitstamp to maintain a reliable reference rate. This is why XBX is relied upon by the leading firms for derivatives and AUM valuation. pic.twitter.com/n3ZdDRfH16
— TradeBlock (@TradeBlock) May 17, 2019
“To be precise, the seller displayed over 3000 BTC on the offer side of Bitstamp and kept repricing it lower. If someone WANTED to push the price down (cough cough), trading as little as possible along the way, that (at that time) is a great way to do it,” explains David Weisberger, co-founder of CoinRoutes.
However, not long after, the prices recovered and were back above $7,000. The cryptocurrency exchange, Bitstamp further said that they are investigating into the matter:
“We closely examine every event that causes large-scale movement in our order book and have started an immediate case investigation.”
This is what happened
1. A jackass put up an aggregated sell of 5000 $BTC on stamp
2. Stamp poor depth + algo glitch?
3. Bmx index is 50% on stamp
4. Massive Bmx liq tanked the mkt
5. Despite all ☝🏻BTC quickly bounced back to $7000
This might be the best chance to BTFMD
— Dovey 以德服人 Wan 🗝 🦖 (@DoveyWan) May 17, 2019
Dovey Wan, the founding partner of Primitive calls this a manipulation stating:
“As NO ONE will simply keep 5000 BTC on exchange, this is deliberately planned dump scheme, aka manipulation imo. That dumper can on one hand dumping on stamp with poor liquidity > move the Bmx contract > 100x short on Bmx to take huge advantage in stacking cheap BTC.”
Since tumbling down, the leading cryptocurrency is back to moving upwards as it trades at $7,2800, at the time of writing. At one point BTC/USD touched $7,493 today, now it’s to be seen if we are onto $10,000 now.
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Bitcoin’s price is $47,420.55 BTC/USD exchange rate today. The real-time BTC market cap of $884.06 Billion currently ranks #1 with a chart dominance at 62.37%, daily trading volume of $14.42 Billion and live coin value change of BTC -2.77 in the last 24 hours.
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