Financial markets have almost always operated on one particular philosophy: Survival of the fittest. This has been proven time and again in legacy financial markets, and now it’s being proved in cryptocurrency markets as well. In last few months prices of cryptocurrencies fell sharply, wiping out almost two-thirds of the total market cap from the global crypto market. Then a few days back as soon as the market was trying to recover from losses, things went south once again and a sharp decline was recorded in prices of Bitcoin as well as other cryptocurrencies. This happened without any news catalysts, which made the whole development even more puzzling. Now, however, some people claim to have found the reason.
According to CCN a mysterious crypto wallet holding more than $720 million in Bitcoins is behind this recent bloodbath of cryptocurrency markets. The wallet was in hibernation since last 4 years, but it has woken up all of a sudden in the recent days. And now the mysterious owner of this wallet is dumping the large number of Bitcoins held in it, thus creating the ruckus in the entire crypto market. There’re a total of 11,114 Bitcoins in this wallet, which represent 0.52% of total Bitcoin supply.
Redditor sick_silk noticed the sudden movement in this wallet sometime during the last week of August. By tracking every transaction in detail on the Bitcoin blockchain he/she figured out that either this wallet belongs to some user of now-defunct online black market Silk Road, or this is some old Mt Gox wallet. This second theory was also backed by Bitcoin Security Specialist WizSec.
Whoever controls this wallet now is not dumping the entire stock of BTC at once, which would have been a fool’s game. Instead, the transactions are being broken down in chunks of 100 coins with help of subwallets. More than $100 million have been dumped in these chunks of 100 coins over the course of last few weeks, which might’ve led to the prolonged bear phase. If the intention of this whale is to dump his entire stock then we’re probably in for a very long bear phase.
In the meantime, however, mainstream media keeps pumping the price of Bitcoin by telling people that now is the right time to buy. So while there will be Reds in the days to come, occasionally we may also see some Greens.