Bitcoin Drops by $200 – Was it Whales or Regulation?

Sales of large amounts of Bitcoin coincide with a letter from the New York Attorney General.

The price of Bitcoin dropped by $200 in a matter of minutes on Tuesday.


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There were two events which may have led to this – two unknown individuals sold millions of dollars worth of the cryptocurrency, and the office of the New York Attorney General announced that it is opening an inquiry into the cryptocurrency exchange industry.

Bitcoin whales

Below you can see a wallet balance dropping by 6,500 bitcoins, which at current prices is worth just over $50 million. The owner of the wallet is not known.


In addition to that, another anonymous trader who purchased $400 million dollars worth of the cryptocurrency in February 2018 sold off 6,600 bitcoins on Monday.


The cryptocurrency community is very sensitive to the behaviour of what they call Bitcoin whales, which are wallets that hold very large amounts of Bitcoin. There are approximately 1,000 individuals who own about 40 percent of the entire market, according to Bloomberg.

One example of a Bitcoin whale is Nobuaki Kobayashi, trustee of a once dominant and now-defunct Bitcoin exchange, who owns about 1.9 billion dollars’ worth of Bitcoin. On the 5th of February, he sold 18,000 bitcoins and caused the price to crash to its lowest in 3 months.

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Such is the sensitivity to the issue, that last month there was a lot of buzz over a sale which didn’t even happen in the end; a CNBC employee was offered 200,000 bitcoins, published a post on Twitter on the subject, and caused some worry.

New York Attorney

According to an official press release, the New York Attorney General A.G. Schneiderman sent a letter to 13 cryptocurrency exchanges “requesting key information on their operations, internal controls, and safeguards to protect customer assets.”

Schneiderman wrote: “Our Virtual Markets Integrity Initiative sets out to [promote] the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”

The exchanges were served with a questionnaire which requests information on the following subjects:

1. Ownership and control
2. Basic operations and fees
3. Trading policies and procedures
4. Outages and trading suspensions
5. Internal controls
6. Privacy and money laundering

The request was sent to major exchanges such as GDAX, Gemini, Bitfinex, and Binance.

Cryptocurrency is also very sensitive to government announcements on the subject of regulation, and some news outlets drew a connection between the drop in price and the release of the letter. However, as Market Watch pointed out, the pronouncement came about 4 hours before the drop.

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