BTC Whales Were Active on Coinbase

By Muyao Shen

Just like the 24/7 crypto market, some traders, especially some whales, did not take last week off for the holidays.

While overall trading volume was lower last week, some traders executed large bitcoin trades on crypto exchange Coinbase, according to crypto trading data firm Kaiko, causing a spike in overall bitcoin trading activity on the exchange.

Among those trades, the most notable one was executed on Dec. 30, which turned bitcoin’s prices temporarily bullish for the day. By charting the second-by-second volume of buy versus sell orders for all trades greater than five bitcoin, Kaiko found a large concentration of such buy orders on Dec. 30, with Coinbase’s market share of bitcoin spot volume among major crypto exchanges jumping from 45% to 68%.

Bitcoin’s spot trading volume market share among major centralized exchanges (Credit: Kaiko)

This is abnormal, according to Clara Medalie, strategic initiatives and research director at Kaiko. She pointed out that Coinbase “never” had such a high market share of volume. During normal market circumstances, exchanges keep a relatively steady market share day-to-day.

“Prices had been low this [past] December, which could be one reason the trader sought to make a large buy order now rather than wait,” Medalie told CoinDesk via an email.

According to data from TradingView and Coinbase, the price of the BTC/USD trading pair rose 1.4% on Dec. 30 after dipping to $46,094.02 from $52,100 over the previous three days.

Traders who usually conduct large-volume transactions may choose to split their orders into smaller sizes over a longer period of time to avoid price slippage or potentially impacting the spot price, as CoinDesk reported previously. Business intelligence software company MicroStrategy, for example, reported that it bought 1,914 bitcoins between Dec. 9 and Dec. 29 for about $94.2 million in cash.

Medalie said that Coinbase’s high liquidity could be one of the reasons why the trader, or group of traders, chose to conduct this trade on the exchange.

“Coinbase works with many large investors through their professional execution services, and they often source liquidity directly from their professional exchange order book,” Medalie noted.

But following the big buys, both large buy and sell orders for bitcoin were placed on Coinbase right before the expiry of bitcoin’s options contract on Dec. 31. On Jan. 1, on the other hand, sell orders with more than five bitcoin dominated Coinbase’s BTC/USD trading pair volume. These large trades, however, did not cause any spikes in Coinbase’s spot market share, according to Kaiko’s Medalie, meaning that similar activity was taking place on other exchanges over the same time period.

BTC/USD pair’s trading volume on Coinbase (Credit: Kaiko)

It is unknown why there was increased whale selling activity on exchanges on Jan. 1, but it is not uncommon to see more trading activity before the expiration of options contracts.

In Coinbase Institutional’s last weekly market newsletter in 2021 dated Dec. 24, it warned about the risks of low liquidity during the holidays that could see the convergence of the spot price towards a maximum pain price.

This convergence price move trend usually comes from spot market manipulations by option sellers (mostly institutional traders) to push the spot price closer to the strike price at which the highest number of open options contracts expire worthlessly. That creates maximum losses – so-called max pain – for option buyers. The max pain point for last Friday’s option expiration was at $48,000 as of Dec. 28, according to Cayman Islands-based crypto financial services firm Blofin.

At press time, bitcoin was changing hands at $46,473.73, down 1.07% in the past 24 hours, according to CoinDesk price data.

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