Was the “data war” a factor in Bitcoin’s crash? Experts speak out

  • CryptoQuant’s CEO maintains his stance on the origin of 18,000 Bitcoin (BTC) deposited on Gemini while Glassnode and analyst Willy Woo label it as “bogus data”. 
  • 28,000 traders were alerted by CryptoQuant about the deposit and probably sold their BTC in panic.

After suffering a crash yesterday, Bitcoin now seems to have returned to its consolidation phase. As CNF reported yesterday, the crash was triggered by supposedly “bogus data” from CryptoQuant, which created panic in the market. The vacant transaction involved 18,000 BTC and supposedly went through the Gemini exchange.

However, various analysts and data providers still disagree on the origin of the deposit or its impact on the market. As a result, a “data war” of sorts has been unleashed. CryptoQuant still classifies the deposit as an external transfer whereby they issued a warning to 28,300 traders, after which panic has supposedly ensued instantly.

CEO Ki-Young Ju continues to take the position that the transaction was between an “unknown entity” and Gemini. The deposited funds did not change Gemini’s order book, so he speculates that the transaction entered the exchange’s custody service.

Internal transaction vs. external deposit in Bitcoin

On the other side of the data war, are Glassnode and on-chain analyst Willy Woo. Young Ju has attempted to refute the interpretation made by Glassnode. The data analytics firm debunked the CryptoQuant CEO’s report, arguing that the transaction was done internally according to its data classification and analysis system.

Glassnode claimed that its conclusion was based on “significantly large recurring transactions, a high percentage of txs on Gemini [and]cluster balance pattern (“sawtooth”).” Thus, Glassnode designated and added the cluster from which the transaction originated as part of Gemini’s custodial services activity:

We explicitly treat it as part of the extended cluster (internal) in the in/outflow metrics – not as funds deposited to be traded on the spot exchange.

This is a cluster identified by us as a large financial service provider that uses Gemini as custodial. We explicitly treat them in the in/outflow metrics as part of the extended cluster (internal) – and not funds that are being deposited to be traded on the spot exchange.

As the events unfolded analyst Willy Woo called the information given by Young Ju “bogus”. The analyst has ruled out that the 18,000 BTC transfer was a whale dumping its funds. Calling on all data providers to be more careful with their claims:

I looked at the txid cited by QC and clicked through to the wallet. This is the balance of the wallet claimed to be dumping into Gemini. It does not look like a whale holder dumping, more like an infrastructure entity like an exchange moving their coins.

Bitcoin BTC

Source: https://twitter.com/woonomic/status/1371721093954736131/photo/1

CryptoQuant alerts are shared with more than 28,300 traders, as mentioned above. Therefore, Woo is sure that the fear in these BTC holders triggered the massive sell-off just minutes after the alert was sent out. This has happened for the second time in a month, according to the analyst.

In addition, he compared Bitcoin’s price on Coinbase, Binance, and Gemini and managed to determine that after the deposit alert was issued, the cryptocurrency’s price on the latter platform “did not move relative to the others.” On the contrary, BTC rose slightly on Gemini indicating a higher level of buying than other exchanges.

CryptoQuant’s CEO made a final clarification upon receiving confirmation from one of CoinMetrics’ chief engineers about the transfer. The individual stated that the deposit was made from BlockFi’s wallet to Gemini, as shown in the image below. However, the exchange is Blockfi’s crypto custodian.

Validated by this, analyst Woo acknowledged Young Ju’s “passion” on the subject, but believes he is giving it the wrong focus:

@ki_young_ju, I love that you’re passionate about this, it’s not a game of right or wrong over an internal or external transfer. This is about validation and responsible fact-checking before alerting large number of traders of directly tradeable market information.

Several users have accused CryptoQuant’s CEO of trying to manipulate the market. The exchange executive merely responded:

So you’re saying I can manipulate the 1.05 Trillion $BTC market by -10%? Thanks. I’ll use my power for good things.

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