AI Tracked Unusual Market Behavior Before Yesterdays Massive Bitcoin Drop

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Yesterday, news spread that Goldman Sachs was sidelining plans of opening its cryptocurrency trading desk, a report coinciding with a market that took a sharp downward turn. The other day, market analysts saw someone take a 10,000 BTC short position while overall market sentiment has been positive.

Top analysts have been questioning why someone would take a $74,000,000 short position so quickly. It didn’t make sense unless he knew something that they didn’t. Only a few days after he started shorting there is some bearish news that comes out.

Others speculate that it could have been someone at Goldman Sachs themselves who took a $74m short position, waited 2 days, then announced they’re pulling out of Crypto.

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These speculations have been just that, speculation. But with new AI technology keeping a watchful eye on the cryptocurrency market, there is evidence that points to a deliberate market manipulation, though by whom is still up for debate. 

What Happened:

When the crypto drop occurred in the morning for quite some time traders were looking for news behind such unusual -10% move across the board. Bitcoin, Ether, Litecoin and other tokens all declined on substantial volume.

Later in the day, the catalyst was found: Goldman decided to pause developments on its rumored crypto trading desk. Many comments around this news were regarding potential insider trading and the fact that institutional buyers would like to get into the crypto space at lower levels thus manipulating the markets.

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Data scientists and market analysts from the RoninAI team, an AI-based crypto signals platform, took a closer look into the situation to see any red flag activities surrounding the drop. A number of indicators were pointing to some unusual behavior right before the drop. One of them is the social sentiment that sporadically increased minutes before the actual drop took place.

The three-day chart below indicates that such volatility in social sentiment takes place often and each time it happens AI algorithms react to it.

This chart doesn’t indicate bullish or bearish, rather a sudden influx of activity that is not authentic. To zoom in, let’s look into the last couple of hours preceding the event. It is very clear how social sentiment spiked above the 3 standard deviations from its mean levels. Historical data indicates these spikes are not typically naturally occurring events.

Three standard deviations event occur in about 0.3% of cases and every time it happens the RoninAI team studies the event to analyze potential market effects.

In the morning drop, 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 or not. The timing in addition to the unnaturalness of such a spike is strong indications.

Data scientists strongly believe this was either market manipulation or insider trading, but are reluctant to give a definitive answer for obvious reasons.

Regardless, the good news for the Bulls is that whoever is shorting 10k BTC has to buy back at some point and it’ll likely push the price up significantly. The bad news is WHEN do they start closing the short positions and buying back. There’s no real way to predict how this event will affect the market in the short and long term.

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