Bitcoin’s volatility isn’t just random: When crypto whales start selling off huge amounts of coin, sentiment takes a beating—like it did last week.
While rumor of a hack at Binance and playing fast and loose with customer coin last week took its toll on prices, as talk of an SEC crackdown on exchanges, crypto whales are major market movers.
Last week, Bitcoin lost over 20 percent, and it’s still down below $9,000 today.
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But news that a ‘Tokyo Whale’ is done with its current sell-off of bitcoin to pay creditors has crypto enthusiasts optimistic that the coin will rebound. Related: Another Trillion-Dollar Wealth Fund Eyes Crypto Exposure
Last week, markets learned that trustees of the now bankrupt Tokyo Mt Gox exchange sold off $400 million in bitcoin over the past few months. They also learned that there’s still $1.7 billion in bitcoin left to unload to pay creditors.
This major dumping of bitcoin, claim some analysts, has shaken the market since the beginning of the year.
Even though there’s reportedly over a billion more bitcoin for the ‘Tokyo Whale’ to dump, crypto bulls are ready for a breather: There will not likely be any more liquidating until the fall.
Mt Gox still needs regulatory approval to unload the rest of the bitcoin.
In 2014, Mt Gox was closed down and filed for bankruptcy after the theft of 850,000 bitcoin from the exchange. In 2015, the case of the mysteriously missing coins landed CEO Mark Karpeles in jail in Japan. He has since been released on bail.
The question is whether the six-month dumping reprieve is enough to bring bitcoin back above $10,000.
In the meantime, Thomson Reuters is trying to make it easier to gauge bitcoin sentiment, adding it to its financial data feeds.
The gauge will use metrics such as greed and fear for investors to hedge opportunities.
But gauging bitcoin sentiment is as challenging as determining its fundamental valuation, which go hand in hand.
Not only is it “fascinating from a psychological and neurological” perspective, it’s also not “grounded in solid economics”, Nobel prize-winning Yale economics professor Robert Shiller told the New York Times.
Indeed, bitcoin sentiment is cryptic at best. Bulls are raging bulls, and bears are exceedingly grizzly. Even when it’s taking a major beating, the bulls can see it reaching $100,000 eventually, while the bears say it will plummet all the way to the bottom, with Goldman Sachs calling it zero earlier in February.
By Fred Dunkley for Safehave.com
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