A sell-off of Ether occurred across every major exchange this week, driving the price down from $51.00 to $47.00. The price has bounced back since then.
The sell-off started at about 23:00 GMT on April 19. Ether, which was holding near its resistance ceiling of $51.00, began to drop sharply and the fall ended two hours later at $47.00. A review of wallet transactions and blocks during this time period reveals that this price drop was caused by a small number of trades spread over several exchanges in nearly equal amounts.
The identity of the trader or traders remains a mystery. The small window of time draws strong correlations to a longstanding fiat market phenomenon: a whale investor cashing out. Whale investors seeking a big pay day would have to spread their sales over many exchanges to get them filled in such a short amount of time – making this theory the most likely scenario. However, the technicality involved in executing simultaneous trades does leave room for other hypotheses.
Some of the exchanges involved in the trades are regulated and some are not. The possibility of bad actors manipulating the market cannot be ruled out. An enormous amount of capital is needed to affect markets in such a way. This is why it’s nearly impossible to do on fiat exchanges anymore. However, virtual currency could potentially be used in such a way by high net worth investors who got into ICOs early.
This unprecedented action is sure to cause much speculation about the future of Ether trading. As exchange platforms and market dynamics continue to evolve alongside the blockchain technologies that drive them, the ability to cut through conjecture is at the heart of understanding these new markets.
Fortunes are being created on virtual currency markets. Stakeholders in virtual currencies have unique opportunities, especially in these early stages, to use blockchains in creative ways that leverage their positions and use new techniques to their advantage. VC markets and exchanges are increasingly being discussed by policymakers regulation is likely to develop.