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A 'whale' selling bitcoin crashed the price by $1,000

·Senior City Correspondent, Yahoo Finance UK

A single large bitcoin (BTC-USD) sale crashed the price of the cryptocurrency by over 10% on Friday.

Bitcoin fell from around $7,726 to $6,777 at around 4am ET (8am GMT). By 9.50am ET, the price had recovered slightly to trade around $7,155 but remains down about 9%.

Blue whale.Balaenoptera musculus.The tips of the flukes of this whale have been cut, probably by predators. Note also the prominent white scar.Photographed in the Gulf of California (Sea of Cortez), Mexico. (Photo by: Francois Gohier/VW Pics/UIG via Getty Images)
The price crash was caused by a bitcoin 'whale.' Photo: Francois Gohier/VW Pics/UIG via Getty Images

The crash appears to have been caused by a large sell order on Bitstamp, a leading European cryptocurrency exchange.

“A large sell order was executed on our BTC/USD pair today, strongly impacting the order book,” Bitstamp tweeted. “Our system behaved as designed, processing and fulfilling the client’s order as it was received.”

The bitcoin price crashed around 4am eastern. Photo: Yahoo Finance UK
The bitcoin price crashed around 4am ET. Photo: Yahoo Finance UK

The company said it had started an “immediate investigation” as is standard due to the large move.

READ MORE: The two types of bitcoin investors, according to top US stock broker exec

“Bitcoin’s blip appears to have been caused by a significant sell order placed on the Bitstamp exchange early this morning, which triggered selling across other exchanges,” Simon Peters, an analyst at trading platform eToro, said.

“Whether this order was a deliberate dump or a fat finger error remains to be seen.”

eToro said the sell order appears to have been around 5,000 bitcoin, which would have been worth around $38.6m at the time the order was placed.

Peters said the sale and subsequent price movement “is a stark reminder that cryptoassets still operate in a nascent market, which is susceptible to significant price moves by whales.”

READ MORE: All the theories behind bitcoin's recent price surge

A “whale” is a cryptocurrency term for an investor who holds a large amount of cryptocurrency that gives them potentially significant market control. Just 448 people or companies hold 20% of all bitcoin, according to crypto investigation company Chainalysis.

Friday’s large sell order comes after a recent price run up for bitcoin. The cryptocurrency had doubled in price since the start of the year and rallied 30% last weekend.

“Given the positive sentiment in the market over the past few weeks, it’s likely that the price will recover soon,” Peters said.

Despite the one day drop, bitcoin remains up over 90% year to date and up over 30% since the start of the month.

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Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.

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