An anonymous bitcoin whale reportedly bought $150 million worth of the cryptocurrency during its recent price crash

Bitcoin ATM
Bitcoin

  • An anonymous bitcoin holder bought more than $150 million during the digital currency’s recent plunge, The Independent reported. 
  • The third-largest holder of bitcoin now has about $6 billion of the cryptocurrency. 
  • Bitcoin’s price crashed by nearly 30% over the weekend but has been recovering since the drop. 

A big holder of bitcoin scooped up millions of dollars worth of the cryptocurrency during its recent crash that pushed the price down by nearly 30% to below $50,000, The Independent reported Wednesday

The third-largest holder of bitcoin bought more than $150 million of the digital currency, scooping up more than 3,000 bitcoins over the past couple of days, the report said, citing data from BitInfoCharts, a blockchain monitoring service. 

The anonymous bitcoin holder’s portfolio stood at around $5.9 billion with the new purchases. The holder’s crypto address first shows activity in February 2019, when bitcoin traded in the $3,000 range and the holder has logged a profit gain of about $3.4 billion.

Bitcoin during Wednesday’s session was up 3% at $50,815. Its price on Saturday crashed by about 27% and slid under $42,000 as part of a broader crypto-market crash. Analysts said the selloff was driven by a mix of concerns including the new Omicron coronavirus variant and increased chances the Federal Reserve will tighten monetary policy. 

Analysts also said the crash was exacerbated by market structure, with many traders using derivatives and borrowed money. 

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The surge in altcoins looks unsustainable and has echoes of the run-up to May’s crypto crash, JPMorgan’s bitcoin expert says

Solana
Solana is one of a handful of altcoins to have surged in recent weeks.

  • The surge in altcoins looks unsustainable and has echoes of May’s market crash, JPMorgan’s crypto expert has said.
  • Nikolaos Panigirtzoglou questioned whether the rise in coins such as cardano’s ada was justified.
  • Altcoins have rallied sharply in recent weeks on hopes that they’ll become widely used in DeFi and for NFTs.
  • See more stories on Insider’s business page.

The recent surge in altcoins looks unsustainable and could lead to a crypto crash of the sort seen in May, JPMorgan’s digital assets expert has said.

Cardano’s ada, binance coin, solana and other tokens have soared in price over the last few weeks, as excitement has built up around their potential use in decentralized finance (DeFi) and non-fungible tokens (NFTs). Most larger altcoins remain sharply higher for the month, even after the crypto market suffered a steep sell-off on Tuesday and another wobble on Friday.

But the rally doesn’t look sustainable, as it’s largely driven by unrealistic expectations about the tokens, according to Nikolaos Panigirtzoglou, a global market strategist at JPMorgan.

“There is a big question mark here,” Panigirtzoglou, who is the bank’s crypto expert, told Insider last week.

“Is the hype with cardano, binance, solana, [and other] alternatives to ethereum justified? Will there be enough traffic in these networks [and] wallet addresses, to justify these kind of valuations?”

It appears as though the crypto market is in a “melt-up” phase, he said, in which investors rush into assets that are rising in an effort to capture some of the gains. He noted such a phase often precedes a sharp fall.

“I think we could have a repeat of what we saw in May,” the strategist said. That month saw the crypto market – including bitcoin and ether – crash, following a rally in which altcoins such as dogecoin and XRP rocketed in price.

Read more: A research analyst at a $2 billion crypto firm lays out the bull case for polkadot that most investors are overlooking – and shares why cardano’s ada is looking overvalued after a stellar run

Likewise, altcoins have rallied sharply in recent weeks, with solana up 318% in the 30 days to Friday morning, according to data site CoinGecko. Cardano’s ada cryptocurrency was up 29% over the same period, while XRP was 23% higher.

Retail investors have been drawn to certain tokens on networks that they expect will challenge ethereum to become widely used in the fast-growing worlds of DeFi and NFTs.

DeFi is the use of crypto technology to remove the need for middlemen in financial contracts, and NFTs are a booming asset class of crypto collectibles and artworks.

Bobby Ong, cofounder and CEO of CoinGecko, told Insider that excitement was “overblown, for sure.”

He sees it as a typical crypto cycle: Investors first pile into bitcoin, then turn to highly volatile alternatives in search of further gains, before a crash causes people to leave the market and eventually start buying bitcoin again.

Panigirtzoglou said he even saw some similarities with the crypto crash of 2018, which was also preceded by a surge in altcoins and ended with bitcoin losing more than 80% of its value. Yet he said the crypto market was unlikely to crash that hard again, because financial institutions and big companies such as Tesla had bought in.

There are dissenting voices, however. Curtis Ting, managing director for Europe at crypto exchange Kraken, doesn’t see the rise in altcoins as a red flag. He said a sharp sell-off in cryptos of the sort seen on Tuesday “helps the market reset itself.”

“A surge in altcoins helps diversify the asset class and create a feedback loop that could ultimately benefit the bitcoin price,” he told Insider.

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Mike Novogratz says the bitcoin market got too excited before the latest crash – and singles out highly leveraged retail traders

Mike Novogratz
  • Crypto billionaire Mike Novogratz said Tuesday’s bitcoin crash came after the market got too excited.
  • He said retail investors using large amounts of leverage were a key factor in the sharp drawdown.
  • Bitcoin fell as much as 17% on Tuesday as the cryptocurrency became legal tender in El Salvador.
  • See more stories on Insider’s business page.

Crypto billionaire Mike Novogratz has said the latest plunge in bitcoin is the result of investors getting too excited about recent developments in the crypto space, and said excess leverage had fueled the volatility.

Bitcoin dropped as much as 17% on Tuesday after El Salvador’s rollout of the cryptocurrency as legal tender was afflicted by glitches. It was around 1% lower at $46,420 on Wednesday, down from above $52,000 early Tuesday.

“I think we just got too excited and this was a little air being popped out of the balloon,” Novogratz said in a Bloomberg TV interview on Tuesday. “The market got too long.”

Novogratz, who runs crypto investment firm Galaxy Digital and is an influential figure in the space, said large amounts of leverage in the system contributed to the steep falls.

“There’s lots of retail money, a lot of it’s leveraged,” he said. “There was about $4 billion of liquidations that happened in a short period of time… That’s mostly leveraged offshore in places like FTX and Binance.”

Read more: A research analyst at a $2 billion crypto firm lays out the bull case for polkadot that most investors are overlooking – and shares why cardano’s ada is looking overvalued after a stellar run

Exchanges such as Binance, Bybit and Huobi allow users to borrow large sums to trade with. Analysts said in recent weeks, traders had been using this leverage to “go long” – that is, bet that the price will rise – on bitcoin and other cryptos.

When cryptocurrency prices fall, traders who have gone long using leverage often sell out of their positions, or the exchange automatically liquidates them to limit losses. This often sends prices down further, triggering more liquidations in a cascade effect.

Novogratz told Bloomberg he thought the market had become excited with good reason. He said Visa buying a non-fungible token for $150,000 and Amazon posting a crypto job opening had made many people think the technology is here to stay.

He said he was confident El Salvador would succeed in its bitcoin rollout, saying the token could become used to send remittances.

“Whenever you’re doing a new technology rollout there are glitches,” he said. “Come back in six weeks or 12 weeks and let’s talk about how it’s working.”

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Billionaire investor Mike Novogratz says bitcoin’s value is a social construct and it would be worth less if governments weren’t printing money like ‘toilet paper’

In this screengrab, Mike Novogratz poses in front of the camera wearing a black hoodie in a park on October 21, 2020.
Mike Novogratz.

  • In a live stream on Wednesday, Mike Novogratz said the true value of the cryptocurrency lies mainly in the community it has built.
  • “The value of bitcoin isn’t the bitcoin code. It’s this social construct. It’s valuable because we say it’s valuable,” he said. “It’s crazy.”
  • He also said bitcoin is more valuable because governments are printing money like “toilet paper.”
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Billionaire investor and long-time cryptocurrency bull Mike Novogratz said the true value of the bitcoin lies mainly in the community it has built, and that it is valuable because people say it is.

Novogratz, the CEO of Galaxy Digital in a live stream with rapper Logic on Wednesday touted the technology underpinning bitcoin but said this would be worthless if no one believed in its potential.

“The value of bitcoin isn’t the bitcoin code. It’s this social construct. It’s valuable because we say it’s valuable,” he said. “It’s crazy.”

Novogratz, whose firm offers cryptocurrency-focused services to investors, said many people have come up to him asking him if he is the CEO of bitcoin. But the billionaire said he just sees bitcoin’s potential, and name dropped other big names backing the cryptocurrency such as MicroStrategy’s CEO Michael Saylor.

“The one thing to remember about the technology, which was cool, is it was the first digital signature you couldn’t counterfeit,” he said. “And so that meant we could have digital money because it could be scarce. If I said they’re 21 million, they’re only 21 million cause you can’t counterfeit.”

He described this as a “profound concept,” highlighting the limited supply of the cryptocurrency.

“You say, well, sounds like a Ponzi, but everything that’s valuable is some form of a Ponzi. It’s valuable because we bring more people in to buy it,” he said. “It wouldn’t be so valuable if our governments weren’t…just printing the money like it’s toilet paper.”

Bitcoin has been trading sideways following the massive crash in May but reclaimed $40,000 this week. Last month’s massive selloff slashed bitcoin’s market capitalization by almost 30% to $766 billion.

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Mike Novogratz compared this bitcoin crash to late 2017, when the market plunged into a ‘winter’ lasting years

GettyImages 1036973538
Mike Novogratz is one of the most high-profile bitcoin and crypto investors.

  • Crypto billionaire Mike Novogratz compared the current state of the crypto market to late 2017.
  • At the time, bitcoin plunged into a “winter” lasting years as buyers lost interest following a rally.
  • Novogratz said the proliferation of other coins was overwhelming the crypto market.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Leading crypto investor Mike Novogratz has compared bitcoin’s dramatic price crash to late 2017, when a boom in interest in digital tokens presaged a market collapse into a “winter” that lasted years.

Novogratz said that the widespread creation and adoption of alternative cryptocurrencies was overwhelming the market and meaning investors’ cash was spread too thin. Investors have recently pumped up bitcoin alternatives like ether, XRP and dogecoin, and turned to new creations like safemoon.

“The proliferation of cryptos is a supply response that overwhelms demand,” he wrote on Twitter. “Same happened in 2017.”

Novogratz said he was confident that “the best projects with utility and community will survive and thrive,” just as bitcoin eventually skyrocketed again in late 2020.

Novogratz is not the first to make the comparison between the current state of the bitcoin market and the situation in late 2017, when a sharp rally to record highs was followed by a collapse in prices.

On Wednesday, bitcoin crashed as much as 30% to $30,000 before rebounding to around $40,000, more than 38% off its April all-time high of close to $65,000.

The drop was triggered by China signalling it would crack down on the use of cryptocurrencies for payments, but the multi-day slide began last week when Elon Musk said Tesla would stop accepting bitcoin as payment for cars due to the network’s huge energy use.

It started a debate in the crypto community about whether this was the start of another bitcoin “winter” – a period in which the price drops sharply and stays low for years.

The last such winter began at the end of 2017, when bitcoin slid from a high of around $20,000 to a low of below $4,000 at the start of 2019.

Novogratz was replying to a tweet from Guggenheim chief investment officer Scott Minerd, who said the crypto market looks like the Tulipmania bubble of 17th-century Netherlands.

“As prices rise, tulip bulbs and #crypto currencies multiply until supply swamps demand,” he said.

Pankaj Balani, chief executive of crypto derivatives exchange Delta, told Insider he also saw parallels with 2017 and the rise of bitcoin alternatives.

He said money has been “rotating” into coins such as ether, XRP, and dogecoin, which is a “typical sign of retail exuberance.”

Bitcoin’s dominant share of the crypto market has been waning steadily since the start of the year, when it accounted for around 70% of total market capitalization. That share has now fallen to just over 40%, based on data from Coinmarketcap.com. This is around its lowest in two years.

But Balani said the money has been coming from investors chasing quick gains and is not “sticky capital” that will stay in the market when prices start to fall.

Analysts have also compared the $100 billion listing of crypto exchange Coinbase in April to the listing of bitcoin derivatives by CME Group in late 2017, which came just before prices plunged sharply.

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