Are the Whales About to Pump Bitcoin?

Bitcoin’s current four-year cycle will end with a meteoric rise to levels never seen before, according to an anonymous holder of more than 7,000 BTC. In an exclusive interview with CCN, the anonymous bitcoin whale says he expects the price to reach $50,000 in at least three years, although it could take up to five for that peak to materialize.

So, what does the whale have to say? More importantly, are people in his position able to manipulate prices to their liking? The answer is a bit complicated.

What the Whale Has to Say

Putting a future price target on bitcoin is notoriously difficult, but an anonymous whale interviewed by CCN believes $50,000 will be achieved in the next three-to-five years. This view somewhat aligns with Hacked’s previous analysis of the four-year cycle.

“I believe that we are either already seeing a bull market return. If not, we’ll see it in the coming months,” he told CCN. “One key indicator is the increase in exchange and OTC trading. Bitcoin consolidation above the 200-day moving average and the approximation of halving are also bullish.”

Bitcoin’s price achieved the so-called golden cross – when the 50-day moving average crosses above the 200-day moving average – last month. The technical picture has continued to improve, leading some to speculate that a return to $6,000 was imminent. At last check, bitcoin was trading around $5,770 and commanded 55.8% of the overall cryptocurrency market capitalization.

The whale in question has been involved in bitcoin since the very early stages when it was far removed from mainstream attention. He evaluated the underlying technology behind the cryptocurrency and determined that it would be a “great prospect for society…” He has accumulated 7,000 BTC during his lifetime, which is equivalent to around $40 million at today’s prices. That fortune would swell to $350 million if  BTC reaches the $50,000 target.

Are Whales Manipulating Bitcoin?

Whales do play an important role in the cryptocurrency market, but “manipulation” probably isn’t the best way to describe their behavior. Like any other market participant, whales have a vested interest in bitcoin’s price, and as long-term holders, they would probably like to see the cryptocurrency rise in the future.

Back in September, Hacked evaluated whether the whales were responsible for bitcoin’s demise in 2018. In particular, we looked at a sudden correction in bitcoin’s price in early September, which chopped off $1,000 over a span of 24 hours. A whale may have precipitated the selloff, but they cannot be blamed for the bear market. Hacked elaborated why this is the case in a follow-up article in October titled, Bitcoin Whales to the Rescue?

The article draws on data from Chainanalysis to show that bitcoin whales aren’t so killer after all. In fact, whales have been largely misunderstood.

For starters, a large majority (some two-thirds) of whales aren’t active traders. As Chainanalysis noted:

“They appear, in aggregate, to have stabilized the market during recent price declines, rather than exacerbating price movements. This makes sense since these trading whales are professionals with no vested interest in abruptly tanking the market. When they require liquidity, traders are likely to use OTC trading platforms equipped to manage large transactions with minimal market disruption.”

Now, once again, this doesn’t mean whales don’t impact bitcoin’s price. They most certainly do. The most recent example occurred in late March when a single trader bought $100 million worth of BTC across three separate cryptocurrency exchanges. BDC Group confirmed that the three exchanges were Coinbase, Kraken and Bitstamp.

This buy order helped to engineer a 20% rally in bitcoin’s price, leading to one of the best monthly gains in recent memory. Read more: Bitcoin is on the Cusp of a Two-Year Milestone. 

But the mysterious buy order followed months of steady accumulation for the largest cryptocurrency. It was later confirmed that bitcoin entered its new four-year cycle at the start of 2019, as price action continued to distance itself from the December low. In other words, the market had turned long before the whale initiated the purchase.

If investors are interested in keeping tabs on bitcoin whales, long-dormant accounts should be the place to start. Some of these dormant wallets were activated in the latter stages of 2018; at the time, it was a toss-up whether they would be net buyers or net sellers of BTC. With the price floor firmly in place, it seems like most of the activity has been on the long side.

The cryptocurrency market has turned a major corner since the start of the year, but the path forward isn’t without major obstacles. Markets are in a dominant uptrend but large and painful shakeouts are to be expected. For long-term holders, this won’t be a problem. Those who are buying bitcoin on margin or using excessive leverage will feel the pain.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

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