In the first week of September, bitcoin saw its price fall by about 14% (from $7,380 to $6,410) following news that Goldman Sachs was planning on halting its plans to set up a digital currency trading desk. While it turns out that this news story may not have been entirely accurate, and although bitcoin has seen dramatic fluctuations all year, some analysts are speculating that insider trading may have something to do with the steep decline. According to Crypto Daily, an artificial intelligence firm found signs of suspicious activity coinciding with the news and the price tumble.
Short Sale Seems Suspicious?
One particular trade raised red flags for data scientists from RoninAI, an AI analytics company. This trade involved a 10,000 BTC short-sell position which took place just ahead of Goldman's announcement. Worth $74 million, the position was a significant one, but it's the timing of the sale which has drawn attention.
Before the news was revealed, bitcoin had seen a steady period of positive sentiment from investors over a period of several weeks. It seemed unlikely that a short seller would wish to bet against the cryptocurrency on the wave of those gains. Of course, if the investor in question had an idea that the news was about to break, this might have made all the difference.
"Sudden Influx of Activity"
RoninAI detected an increase in social sentiment surrounding bitcoin even as the leading cryptocurrency fell by about $350 in just two hours. Analysts from the company suggested that "[the] chart doesn't indicate bullish or bearish, rather a sudden influx of activity that is not authentic." The company added that "the break above the 3 standard deviations took place about 10 to 15 minutes right before crypto declined to spur more questions as to whether such an event was, in fact, a market manipulation."
RoninAI has previously said that "it has been proven that social sentiment influences cryptocurrency prices, so the opinion of the crowd certainly matters...one should take into account what the general masses are saying, but to remain skeptical and incorporate the movements of the crowd into a more advanced strategy."
As cryptocurrencies have become increasingly popular, concerns about manipulation and insider trading have grown as well.