A large transaction by a famous crypto whale shook the Bitcoin market. The whale sold nearly 200 BTC at approximately 21.35million dollars. One Bitcoin was then valued at approximately 108 398 dollars. The sale was immediately acted upon by another trader who went ahead to take a 3x leveraged short position of value of 60.89 millon dollars indicating that he was quite sure that a price fall was about to occur. Although significant Bitcoin transactions have occurred in the past, the size and timing of this one received much media coverage.
Breakdown of the Whale’s Trading Strategy
Whaling in this context implies that the trader is not gambling, but strategizing. To start with, the whale sold almost 200 BTC, and it earned him a substantial cash sum. This kind of sale may cause fear to both large institutional traders and the smaller retail traders. Once sold, the whale initiated a 3x leveraged short position of 561 BTC.
Reaction and Price Levels of the market to follow.
Bitcoin has been trading at a range of between $108,000 and 110,500 which analysts indicate is a short term support level. Below that, the selling pressure would increase, which would fit the bearish opinion of the whale. Should it increase beyond that area or rebound, the short may be closed and the whale will have to incur a loss.
Leveraged trading may have big profits and big risk. In the case of 3x leverage, a 10 percent decline in Bitcoin would result in a 30 percent loss on the trader’s position. Should Bitcoin rise rather than fall, the whale could be forced to sell its $60.89 million position in a hurry and may lose a lot of money.
This type of trading cannot be done by all investors, only highly experienced traders are able to navigate the margin rules and the time of the market. It also leaves us wondering whether other whales or institutional traders would behave in the same way, which may increase the effect. Since Bitcoin is in a significant technical zone, the shift implies that at least one large participant believes that a swift shift could occur shortly.