Crypto Traders Smell Institutional-Grade Bitcoin Price Manipulation
After welcoming a flock of major institutional investors into the Bitcoin (BTC) world in 2020, the cryptoverse is now debating that the crypto market has entered another level of manipulation also.
"Bitcoin's parabolic rise is unsustainable in the near term. Vulnerable to a setback. The target technical upside of USD 35,000 has been exceeded. Time to take some money off the table," Scott Minerd, Global Chief Investment Officer (CIO) at Guggenheim Partners, a major global investment and advisory firm, said on Monday (UTC time) when BTC was already trading below USD 35,000.
And it was enough to start the manipulation debate.
Some were questioning how does this statement follow a recent, very bullish one, with others saying that Minerd was trying to "hype pumping it up to 400k so he could dump on us early."
The "400K" number comes from Minerd's December 16 interview with Bloomberg TV, saying that BTC's fair value could still go higher. More precisely, "our fundamental work shows that bitcoin should be worth about [USD] 400,000," based on the scarcity and relative valuation, said the CIO, without providing a timeline when BTC might reach this level.
"Of course we made the decision to start allocating toward bitcoin when bitcoin was at [USD] 10,000. It's a little more challenging with the current price closer to USD 20,000," Minerd said, later adding that "ultimately you have to buy it."
Also, as reported, in late November, Guggenheim filed to the American Securities and Exchange Commission (SEC) to reserve the right to invest as much as 10% of its USD 5.3bn Macro Opportunities Fund in the Grayscale Bitcoin Trust. This filing is estimated to become effective on January 31.
"Seems Minard wants to buy [USD] 500 million in bitcoin and as price runs higher he's now telling people to take profits," economist and trader Alex Krüger said.
Others too are using these differing statements as an argument that institutions are trying to get traders' bitcoin at lower prices.
DONT LET THEM STEAL YOUR BITCOINS pic.twitter.com/ONfjtND3Df— frxresearch (@frxresearch) January 11, 2021
The theory includes a well-known (in regulated markets illegal) maneuver executed in order books, whereby a whale, who has a bunch of BTC to offer for sale, indeed offers to sell a bunch, with many traders selling as soon as they see it, aiming to buy back later at the lower price once the whale's BTC dump goes through. As these traders sell, the price goes down - and the whale pulls the order at the last moment, switches to buy, and makes a purchase of the now plenty available BTC at a lower price.
Dear noobs,— 찌 G 跻 じ ⚡️ 🔑 (@DegenSpartan) January 11, 2021
Your favorite coin is NOT naturally going down. It is being pushed down via whales placing spoofy sell orders on exchanges to make noobs and risk managers sell to "buy back lower". They are stealing your bags and will make you buy back at a higher price.
RT this https://t.co/1js7juJOf5
Furthermore, Bison Trails' Protocol Specialist, Elias Simos, tweeted that while minor crypto ocean creatures were selling, whales were "gobbling up" their BTC.
Addresses with more than 1k $BTC continue growing at the expense of all others–even as this most recent downturn is taking effect.— Elias Simos (@eliasimos) January 11, 2021
While you were selling, whales were gobbling up your Bitcoin... pic.twitter.com/cWszH3W9um
In either case, the correction has been already expected, and US-based investment giant JPMorgan called this recent rally an unsustainable speculative mania while setting a long-term theoretical target of USD 146,000 per BTC.
Also, AMDAX Asset Management CIO Marcle Burger argued that "long term 35k is probably nothing, but given how fast we got to exceed 40k, a larger correction (30%ish) was to be expected."
Other's don't seem particularly impressed by any of this, as they see nothing particularly new here, claiming that institutions are doing what they've always done, "call crazy targets" when they want to sell, say it's overpriced when they want to buy - "first sell, then give out a byte that creates fud, and when the markets trend lower, buy again," as a commenter said.
Also, as reported, as BTC becomes more integrated into institutional portfolios, it could become more correlated with other assets, and external events might have a growing impact on bitcoin.
In either case, crypto analytics firm Santiment noted that this is the largest one-day bitcoin correction since Black Thursday last March, saying that "those awaiting opportunities to buy projects at prices prior to this year's surge got their wish."
Meanwhile, crypto exchange OKEx CEO Jay Hao urged responsible trading during short-term volatile crypto markets, while Svenson argued that the worst part of the new money coming into crypto is that these individuals are easily spooked by the volatility.
In the past 24 hours, 245,092 trading positions, worth USD 2.56bn were liquidated, according to bybt.com data. However, as crypto trader Loma reminded "we haven't had many consecutive red days across the board all year".
At the time of writing (12:08 PM UTC), BTC trades at USD 34,036, correcting lower again from USD 36,259, reached a couple of hours ago. The price is down by 13% in a day, trimming its weekly gains to less than 11%. It rallied by 88% in a month and 329% in a year.
Imagine:— Loma (@LomahCrypto) January 11, 2021
You're the CIO of Guggenheim.
Before securing profits for your company, you're going to go on Twitter(dot)com and tell other people to dump on you first and then get a shittier sell after the 30% dump.
I know right...the CEO and founder is still missing......— Zachary (@zakeryrivera) January 11, 2021
Technical analysis had pointed to overstretched $BTC conditions all the way up since 18K. So don't fall for nonsense.— Alex Krüger (@krugermacro) January 11, 2021
There's been very heavy spot selling since early today, against an overlevered market. Unclear if miner or macro driven. Could be both. https://t.co/FbM90mxnqB
The 24/7 markets paradigm don’t really play out during weekends once the institutionals are in the market. Instead,… https://t.co/BwI4xu4HGF— Ma/ya Zehavi (@mayazi)
@jp_koning Of course bitcoin price volatility is softening. You just insist on using a metric not significant to me… https://t.co/yO4vrjTvIn— Fernando Nieto (@fnietom)
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