Early this morning, crypto markets almost universally experienced a price drop at around 5 am UTC. Yesterday’s crypto market rally was broken after the flash sale and markets have somewhat recovered and are now relatively stabilized.
Crypto Twitter is still catching on, with only a few users experiencing confusion about the situation.
How can the entire crypto market crash like that?
— Sports Guy (@Jimbeamclassic) August 2, 2020
The markets crashing universally at the same time could be translated to trading bots reacting to arbitrage trading opportunities across exchanges. The uniform drop across most popular trading pairs (apart from stablecoins) leaves a lot of room for interpretation.
Let me know what you think by commenting on the following tweet.
— Zoran Spirkovski (@SpirkovskiZoran) August 2, 2020
There’s yet to be a real explanation, but looking at the charts, only stablecoins experienced gains at the same time, a signal that a whale pumped the markets, before promptly heading for the exit door. So, let’s look at the anomaly, i.e. stablecoins.
A quick look at WhaleAlert, a twitter account that reports on large crypto movements, we notice a strange phenomenon. Hours prior to the dump, approximately $52 mil USDT were transferred from Tether Treasury to Binance, and another $55 mil USDT was transferred from the treasury to Huobi.
This was followed by an issuance of a new batch of $250 mil USDT, at the treasury.
Find the rest of the WhaleAlert tweets at the end of the article.
Conveniently both Binance and Huobi are the exchanges that experienced the highest levels of USDT-related volume in the past 24 hours, showcasing them as the main price driver behind the action.
Was there foul play and market manipulation behind the rally and subsequent dump, or was this just an opportunity taken by a profit-hungry whale?
While there are hints pointing at an unholy partnership between iFinex (Tether), Binance, and Huobi in an effort to extract profits, there is no substantial proof on which we can make this claim.