Bitcoin has had an active few past days with a sustained bullish run. Currently trading at over $61,000, the coin has been rallying from the lows of around $30,000 in the past month. However, one of the most notable price surges was earlier when the coin hit the $54,938 mark in two weeks ago. This was believed to be a push from large Bitcoin purchases on central exchanges.
Blockchain data shows that either a whale or group of whales placed Bitcoin orders valued at $1.6 billion within a few minutes on a central exchange. The reason behind the order remains unclear.
Where did the whales place the Bitcoin order?
CryptoQuant, a South Korea-based blockchain data firm established that a group purchased massive Bitcoin amounts on centralized exchanges on the spot market around 13:11 to 13:16 UTC Wednesday.
The timing coincided with the U.S Republicans making favourable comments about digital currencies. At the same time, there have been positive expectations that the Securities and Exchange Commission (SEC) could soon approve futures-based Bitcoin exchange funds.
At the moment, the exact central exchange from which the order was made is yet to become clear. Part of the crypto community believes it was from Coinbase. Ki-Young Ju, CryptoQuant CEO believes the purchase could have been on Coinbase due to the sharp rise in the Coinbase premium at the time the purchase was made, before dropping again. An increase in the Coinbase Premium tends to show a rise in the purchasing power on the exchange.
Other Bitcoin analysts on the other hand feel the purchase could have been on Binance. Data from the blockchain data firm Glassnode shows that the difference between the net hourly transfer volume flowing into and outside Coinbase remained the same compared to those of Binance, on a 48-hour moving average.
While Coinbase showed no increased trading activity, Binance’s buying indicators increased. IntoTheBlock, a Miami-based blockchain data firm also has data that shows the purchase that happened on Binance.
Why was this Bitcoin order purchased on the centralised exchanges?
Even though crypto exchanges are all about facilitating the buying and selling of cryptocurrencies, it is never wise to place such huge amounts on exchanges for an extended period of time. The volatile nature of crypto works such that such huge purchases or selling can impact the market. These transactions are best placed on over-the-counter (OTC) markets. That is why it raises concerns when whales choose central exchanges to buy Bitcoin.
One possible reason for the purchase on the exchange spot market was to stimulate price increase. The whales understand the power in their transactions. With such a huge purchase, it was likely to lead to further upwards movement spurring bullishness in investors. Investors would end up putting their money in the market due to Fear Of Missing Out (FOMO).
At the same time, there is the possibility that the whales themselves are looking to enter the market to take advantage of the bullish industry trend and potential further upwards movement.
Whatever reason for the purchase, it has helped Bitcoin as the coin continues to gain value.