On April 14, a sell order for 2,500 bitcoins was entered on the Binance order book, valued at approximately $212 million, at a price point of $85,600, which was around 2-3% higher than the existing spot prices.
Observing this substantial order, the bitcoin price began to move towards this level around 17:00 UTC. However, the order vanished suddenly, as indicated by Coin Glass data, leading to temporary confusion in the market as traders attempted to adjust to the sudden lack of liquidity.
The price of bitcoin was already under pressure due to geopolitical tensions, which exacerbated the situation, causing it to drop further following the abrupt disappearance of the order.
What transpired?
One possibility is that the order was a deceptive tactic known as “order spoofing.” Defined under the 2010 U.S. Dodd-Frank Act, spoofing involves placing a large limit order with the intent to cancel it before execution, which manipulates market activity.
Understanding Market Reactions
As illustrated in the liquidity heatmap, the order at $85,600 appeared to represent a significant resistance point, prompting market prices to trend towards it. However, this liquidity was likely fabricated, misleading traders into believing the market was more robust than it was.
It’s also possible that the trader behind the $212 million sell order aimed to generate short-term selling pressure to fulfill limit buys. Once those were executed, the order was likely canceled.
Systemic Concerns
Dr. Jan Philipp, a former ECB analyst and now managing director of Oak Security, commented to CoinDesk that such manipulative behaviors represent a “systemic vulnerability,” especially in thin, unregulated markets. Unlike traditional finance, where spoofing is outlawed and regulated, the crypto space operates in a more ambiguous area.
