In the crypto industry, conspiracy theories and rumors of scams are common. However, many retail traders, who rely heavily on social media for information, often lack a basic understanding of the market.

Recently, several reputable crypto market analysts have identified an entity known as the “Binance Manipulator” – an organization with extremely strong activity in Bitcoin futures trading. This entity is believed to be the main reason why Bitcoin price could not surpass $66,000 and return to test the $63,500 support level.

Despite clear evidence of large orders and trades, many unproven theories and false speculations have contributed to the belief that this entity is intentionally pushing down the price of Bitcoin.

Even assuming that this entity placed multiple large orders in the Bitcoin futures order book, it is impossible to determine whether they used other accounts to buy in.

Arbitrage and Hedging Explain Large Bitcoin Futures Orders

For large trading desks, the use of separate investment vehicles for arbitrage and long-term holding is common, and not illegal, even in traditional investment funds or hedge funds.

Thus, an entity can use large sell orders – commonly known as “spoofing” – to create confusion and doubt in the market, while covertly buying up these contracts. In essence, they appear to be large sellers, but they are actually net buyers of derivatives contracts – a theory supported by the increase in open interest (OI) on Binance.

More conflicting data emerged from the buy side, as order book analysts observed a large amount of Bitcoin buy orders worth over 4,000 BTC being placed on futures contracts after the $64,500 support level was broken.

These data depict a situation where large entities of similar size are competing with each other to try to manipulate the market, but the price of Bitcoin still fell as investors actively took profits when S&P 500 futures signaled a correction, and media coverage was skewed negative. Several major economic reports highlighted stagnant global growth and tensions in the Middle East.

TWAP Strategy Rejects “Binance Manipulator” Theory

The “Binance manipulator” theory hit another major snag when a ChimpZoo post showed that the entity had stopped placing large sell orders and switched to selling Bitcoin futures contracts through market orders executed at set intervals.

TWAP, or “time-weighted average price,” is a popular strategy among institutional traders, including arbitrage desks and market makers. By breaking a large order into smaller, more frequent orders, the goal is to minimize the impact on price. This is the opposite of manipulation, so if the entity was actually trying to push the price of Bitcoin down, this approach would be unreasonable.

Arbitrage transactions are typically aimed at exploiting differences between markets, whether between different exchanges or between different products. If this entity receives spot BTC or ETFs via the OTC market at a discount, it makes sense to place large sell orders in Bitcoin futures as a hedging strategy.

The job of an arbitrage desk is to balance risk using derivatives markets, ultimately selling the spot market position and buying back BTC futures contracts in a short (bearish) position. Similar examples can be found in the options market, where a market maker can test the market by placing large sell orders on futures contracts before executing a trade that results in exposure to upside risk.

Ultimately, we may never know the true intentions of these entities, nor whether the same group was behind both the buy and sell order walls or simply used futures as a hedge against other financial instruments. While the “Binance manipulator” theory cannot be completely ruled out, all available data points to this being legitimate and normal market activity.