Examining Jump Trading’s Wallets Following Harsh Cryptocurrency Market Downturn

(Bloomberg) — In the wake of a severe market downturn at the start of the week, crypto investors have been licking their wounds and meticulously examining the wallet activity of Jump Trading for potential insights.

Cryptocurrency balances within wallets presumed to be controlled by Jump saw a decline of approximately $247 million from August 4 to August 8, according to Arkham wallet analytics. Lately, Jump has been transferring significant amounts of Ether, reaching into the hundreds of millions, to the active hot wallets of exchanges like Binance, OKX, and Coinbase, notes the analysis firm. Transferring to a hot wallet usually implies the intention to sell.

Among the leading cryptocurrencies, Ether, which ranks second in market value after Bitcoin, faced one of the most substantial price drops recently. It plummeted nearly 23% on Monday and is down roughly 35% since July 22.

While the sharp declines experienced on Sunday and Monday are part of a broader market selloff that impacted everything from global equities to niche crypto assets, Kaiko analyst Dessislava Aubert pointed out that “Ether has severely lagged behind Bitcoin in the latest downturn,” also marking the lowest Ether-to-Bitcoin price ratio since 2021. “This decline can be tied to increased sell orders from Jump and other liquidity providers,” Aubert elaborated.

When asked, a representative from Jump Trading stated that the firm does not discuss its wallet holdings or transactions publicly. The wallet ownership claims made by Arkham could not be verified independently by Bloomberg.

The trading in question by Jump represents only a fraction of Ether’s daily average volume, which is around $9 billion for the year, reported by analysis provider CCData. Nonetheless, the trading profile of Jump as a leading market maker and digital asset trader over the years leads to speculation that its movements in the cryptosphere might unsettle some investors.

GSR co-CEO Rich Rosenblum remarked that “both retail and professional observers recognize Jump as one of the informed participants who profit from the spread,” further commenting that the firm’s decision to offload positions, especially on a Sunday, was cause for concern. “You would expect them to be executing the opposite activity in such situations,” he added.

Nevertheless, there is skepticism in the market about whether Jump’s actions significantly contributed to the volatility in cryptocurrencies. Zaheer Ebtikar, the founder of crypto fund Split Capital, dismissed much of the speculation as “unsubstantiated chatter.”

“People are intrigued because Jump is a familiar entity,” Ebtikar commented, noting that the company draws extra scrutiny because the trading community believes it possesses insider knowledge. “The crypto world thrives on rumor,” he stated.

Jump’s track record in the crypto sphere is mixed. In June, news came out that Kanav Kariya, president of Jump Trading’s crypto division, planned to exit the firm. This news followed a challenging period where Jump found itself at the heart of a major crypto fiasco. It was a primary supporter of the TerraUSD stablecoin project that eventually failed, and was also among those firms that US prosecutors probed following the token’s 2022 plummet.

The Chicago-based trading firm also had to secure roughly $320 million in funds to offset losses tied to the crypto project Wormhole after it suffered a breach in 2022. Following that incident, Jump distanced itself by spinning off Wormhole, with many from the Wormhole team departing from Jump to manage it independently.

Recently, Fortune reported on June 20 that the Commodity Futures Trading Commission is looking into Jump’s cryptocurrency trading and investment practices.

Despite drawing back from crypto trading activities in the US last year due to regulatory uncertainties, Jump remains an echo in the sector. Arkhamindicates that since the start of the current year, their holdings have modestly increased to about $434 million.

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