Bitcoin: Price rises by 500 USD in minutes – Pump and Dump?

  • The Bitcoin price rose yesterday, December 04th, by over 500 US dollars in a matter of minutes.
  • Many analysts attributed the price movement to the current market situation and the weak trading volume, which makes the market vulnerable to larger transactions.

Bitcoin and other cryptocurrencies such as Ethereum, Litecoin and Bitcoin Cash suddenly soared yesterday, December 4th, with the BTC price exploding temporarily from USD 7,230 to USD 7,770 within 10 minutes. What followed was a truly bizarre price movement. The next few hours after the pump, there was a normal correction, as the BTC price settled at USD 7,480.

However, this was followed by another sudden price movement, this time downwards. Within 5 minutes, Bitcoin fell by around 300 US dollars, completely erasing the gains from the sudden rise. As popular crypto-analyst Josh Rager noted, such a price movement cannot be “made up” and said that he wishes other traders every success in “hunting whales”.

Bitcoin’s volatility has risen sharply

Other analysts also agreed with Rager’s analysis. Many analysts attributed Bitcoin’s bizarre price movement to the current market situation and found that the market is vulnerable to large traders making larger transactions due to its weak trading volume.

As Forbes reported, Mati Greenspan, founder of Quantum Economics, wrote in a recent article:

As I write this morning, today’s price spike does seem a bit suspicious. […] It all points to the assumption that this was the outcome of a single player with a large buy order. Or in other words… a large whale stacking sats.

Tim Enneking, Managing Director of Digital Capital Management, offered a similar perspective:

With this unusually low volume crypto markets have experienced, any single, large transaction has an [outsize]impact. This is true both because the transaction itself will affect markets and because, in the absence of other signals, market watchers overreact to such a transaction and exaggerate the move, regardless of direction

The most likely reason for the pump might have been a buy order at OKex for 13,000 BTC (about 90 million USD), which drove up the price of BTC through USDT.

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Are Bitcoin price pump and dump times over?

After Bitcoin’s price movement, Peter Schiff, a well-known Bitcoin critic and CEO of Euro Pacific Capital, has once again taken the floor. Schiff explained in a tweet that “pump-and-dumpers are now losing their mojo”. Schiff predicts that “the game will be over for Bitcoin” when the pump-and-dumpers fail to manipulate the market and make profits.

Of course, the opinion of Schiff should not be taken too seriously. The spike just shows that the cryptocurrency market is still in its early days, while its volatility still offers a lot of potential for investors. Events that would hardly move other markets can have a dramatic but typically short-lived effect on Bitcoin.

In the field of cryptocurrencies, the term “FOMO” (Fear of missing out) is not used so often for no reason. Mostly even before there is a supposedly “big” announcement, the price of the respective cryptocurrency rises strongly, which is why the phrase “Buy the rumors, sell the news” has established itself.

Once larger Wall Street and investment firms such as Bakkt, Fidelity, or TD Ameritrade have established their trading platforms and rolled them out for the general public, this could change quickly. But this would also speak for the maturity of the Bitcoin market, which the US Securities and Exchange Commission (SEC) is demanding for the approval of a Bitcoin ETF.

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About Author

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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