Manipulation within the cryptocurrency market has been one of the main issues that the U.S. Securities and Exchange Commission likes to cite when turning down proposals for Bitcoin-backed exchange-traded funds (ETFs).
While some observers disagree with its reluctance to list these ETFs, the SEC’s core reasoning is sound. The latest evidence of potential manipulation within the Bitcoin market comes with the latest downturn, as an unidentified investor took out a massive short position on BTC just days prior to the major sell-off fueled by leaked insider information pertaining to Goldman Sach’s decision to halt its efforts to build a Bitcoin (BTC) trading desk.
The investor took out a 10,000 BTC short this past Sunday, roughly equalling $74 million at the time. This short brought the total market short positions on BTC up to 32,000 BTC, which has since surged to more than 37,500 BTC during the recent downturn.
While it is impossible to determine if this particular investor had access to the Goldman Sachs information prior to it being released, these types of trades would definitely raise red flags in traditional capital markets.
Adding fuel to the downturn, over the past week, nearly 16,000 BTC have been transferred from a wallet allegedly formerly involved in Silk Road-related activity to several major cryptocurrency exchanges, including Binance and Bitfinex. The major investor may have started dumping his holdings on the market, as the trading volume for Bitcoin reached $5.5 billion over the last 24 hours.
Bitcoin has dropped more than 11% over the past 24 hours and currently stands just north of $6,500. This sell-off has been especially tough on altcoins as the AltDex 100 Index (ALT100), a benchmark index for large-cap cryptocurrencies and tokens, is currently down over 14%.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.