Bitcoin was spooked by a ghost Wednesday, tumbling 7% in the span of an hour on reports a previously inactive address dating to the blockchain network’s earliest days had transferred more than $300,000 of the cryptocurrency.
The scare brought a quick end to bitcoin’s four-day rally. Prices for the largest cryptocurrency by market value fell to around $9,500 as of 17:15 UTC (1:15 p.m. in New York) from $9,788 on Tuesday. Earlier Wednesday the rapid sell-off took bitcoin as low as $9,100.
The hourly drop was the biggest tumble since May 10, when a brief outage on Coinbase caused the price of bitcoin to dip 10% in 30 minutes.
Wednesday’s tumble was most pronounced on Luxembourg-based exchange Bitstamp, where the price for 1 BTC lost 7% in one hour.
The sudden drop came as crypto traders lit up Twitter after bitcoin blockchain data showed the address, inactive for 11 years, had moved up 50 BTC to different wallets, then another 9.99 BTC earlier in the day. The address’ owner is unknown at present but the coins were valued at around $379,200 at press time.
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The market pullback appeared to be exacerbated by the liquidation of heavily leveraged positions on the Seychelles-based BitMEX exchange, where traders can use derivatives known as perpetual swaps to bet up to 100 times their money down.
Spot-market prices briefly diverged from those in derivatives markets, Vishal Shah, founder of the cryptocurrency exchange Alpha5, told CoinDesk via a Telegram message.
A price gap as high as $15 opened up between spot exchanges and BitMEX, he said.
“The spot index was higher than perpetual swaps” on BitMEX, Shah said. “This shows that it’s leveraged guys getting liquidated, while the spot bitcoin market is still firm.”
Hunter Merghart, head of U.S. operations for Bitstamp, told CoinDesk in a phone interview there appeared to be a “large sell order on the exchange” but that operations were functioning normally.
“In general, we see large buys and sells all the time,” Merghart said. “We don’t know why people buy and sell, but it’s probably the news” of coins moving.”