Single traders appear to still have an outsized influence on the bitcoin market. Thus far in September, analysts have cited a single trader as the likely cause of two significant price movements, both of which point to liquidity problems in the nascent market. In a time when bitcoin markets are characterized by low trading volume and speculation, bitcoin prices have become vulnerable to the point where either a single buyer or one, large transaction can trigger sizeable shifts. For example, on Sunday, 11th September, bitcoin prices plunged more than 5% in less than an hour, according to BPI data. During just a half-hour session, the digital currency fell from $628.14 at 19:00 UTC to $595.43 by 19:30 UTC. Here, analysts cited low trading volume and a highly speculative market when explaining this sharp drop, asserting that a single large transaction was likely to have helped fuel this decline. Petar Zivkovkski, director of operations for bitcoin trading platform WhaleClub , for instance, believes the sell-off was likely the result of one player. He told CoinDesk: "The current market environment is illiquid, making price susceptible to larger players with larger firepower. In this case, a few hundred BTC sold triggered a sell-off amplified by the use of high leverage by individual players." His assertion that traders harnessed substantial leverage is backed up by Whaleclub data, which reveals that 76% of positions were long on 11th September and confidence, the percentage by which a particular day’s position sizes were larger than average, reached 75%. Complicating matters is that when there are many speculative bets on an asset like bitcoin, these wagers can turn a modest price movement into a larger fluctuation, triggering either a short squeeze or a long squeeze. Rise above $600 A good example of how low liquidity and substantial […]
