However, it seems these price spikes might not be organic, as a researcher named Hasu might have stumbled upon the reason for the BCHSV price swings.
In his research, Hasu finds one factor that might be moving BCHSV’s price around. That reason? Binance. Binance, one of the world’s most popular cryptocurrency exchanges, responsible for hundreds of millions of dollars of volume per day, made a move that might be the cause for the price swings: they disabled deposits and withdrawals for BCHSV.
At the time of the Bitcoin Cash (BCH) fork, Binance explained that they would be opening trading for both sides of the chain split, as well as distributing tokens to users as soon as possible. It seems however, that problems with the BCHSV blockchain caused Binance to pause deposits and withdrawals.
This meant that the only traders with BCHSV on Binance were users who held BCH prior to the fork, or those who buy it on Binance’s marketplace. Once Binance paused deposits and withdrawals, it made it possible for someone to corner the market of BCHSV on Binance. Pausing deposits & withdrawals limits the amount of supply that can enter the exchange, and when there’s a limited supply (but infinite demand), that means prices can get inflated. Hasu explains his theory:
My theory is that some entity held a lot of BCH on Binance pre-fork and is now in control of most of the supply. That allows them to perform a professional Pump and Dump, where they first wash trade the price up by selling BSV to themselves back and forth, at increasingly higher prices. Further motivated by coverage on social media, retail investors FOMO into the pump. At the height of the pump, the original holders distribute the coin to retail and liquidate their position.
Is this what happened? Was this an orchestrated pump and dump? It’s impossible to tell for sure, but one thing we do know is that Binance prices of BCHSV were irregular. During this same time period, prices of BTHSV on Binance were as much as 10% higher than of BCHSV on Poloniex, hinting that something unusual was taking place.