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A small group of deep-pocketed traders has been able to exploit market sentiment and set the trajectory for crypto prices, according to one asset manager. Travis Kling, Founder and Chief Investment Officer at Ikigai Asset Management, believes that there could be sufficient momentum to take Bitcoin (BTC) past its all-time high.

Based on information collected from his own analysis, as well from conversations with other institutional investors, Kling hypothesizes that a small group of “risky whales” manufactured the recent market upswing.

“We believe a relatively small number of highly sophisticated, well-capitalized, highly risk tolerant market participants have been walking this crypto market higher over the last seven weeks,” Kling first wrote in a note published April 1st.

Through a series of coordinated buys executed at key moments, these risky whales may have reversed the market’s trajectory over the past four months, laying the foundations for the latest bullish trend.

Although sentiment is important in all markets, cryptocurrencies are especially susceptible. FUD and FOMO affect market price in a two-way feedback loop, Kling says: a concept George Soros originally referred to as ‘reflexivity.’

According to Kling, the initial recovery was first triggered by Jay Powell, Chair of the Federal Reserve. In late January, in response to considerable presidential pressure, Powell reversed the Federal Reserve’s commitment to end its decade-long policy of quantitative easing.

“There’s a good chance that Jay Powell put the bottom in crypto,” Kling told an audience at Ethereal Summit earlier this month. A dovish Fed allowed additional money to flow into the global economy, increasing investor appetite.

That appetite included digital assets. Anecdotally, Kling has heard of a significant step-change, with crypto-specific as well as global macro funds buying bitcoin for a long-term hold.

The role of Bitcoin whales

According to Kling’s hypothesis, the Fed’s capitulation gave the ‘risky whales’ an opportunity to take the crypto market up to higher price levels.

“Reflexivity is strongly present in this asset class,” Kling explained to Crypto Briefing after the event. An “aggregate of good sentiment,” including Jack Dorsey’s explicit endorsement of Bitcoin, JPMorgan’s and Facebook’s blockchain initiatives as well as the rise of IEO platforms, could have laid the foundations for a market upswing.

The upswing began when low-liquidity coins started to pump with no news and little retracement. Litecoin (LTC), for example, managed to surge on unsubstantiated rumours that the project might be experimenting with the Mimblewimble privacy protocol.

The unexpected surge, and the $10bn sell-off a few days later, could have been caused by a single participant taking advantage of low liquidity, Kling says.

Over time, this brought Bitcoin closer to its resistance levels. “The market nestled closer up to $4,000, where there was considered to be all that resistance,” Kling explained. “Breaking past that boundary causes a series of liquidations.”

These liquidations culminated in April’s ‘bitcoin boom’, when a series of coordinated buys triggered mass liquidations on BitMEX and pushed prices even higher.

“The biggest part that risky whales played in reflexivity is turning a downward spiral into an upward trajectory,” Kling added.

Can Bitcoin Keep Flying?

Crypto markets resemble the U.S. stock market in the early 1900s, argues Kling. Both were and are closely influenced by a small number of large market participants, with sufficient heft needed to determine overall trajectories.

Kling refers to this type of activity as ‘chicanery,’ rather than market manipulation. Whereas manipulation implies criminal activity, the actions of the ‘risky whales’ aren’t necessarily illegal.

Kling’s not certain how long this trend will continue. If the momentum carries, it’s likely Bitcoin will hit $9,600, the next price level with significant resistance. It briefly managed to touch $9,000 today, according to data from CoinMarketCap.

“It’s not the entire market that needs to decide prices should be higher,” Kling observed in his April 1 note. “[J]ust one marginal buyer willing to have a slightly more bullish view on the everchanging value of Network Effect.”

Bitcoin could soon cross the $10,000 barrier. “This is not a linear market,” Kling said, and once that barrier is passed, Bitcoin could snowball to $20,000, or even $30,000, as euphoria sets in and reflexivity pushes prices still higher.

For the whales who started the trend, Kling believes most of them value Bitcoin in the hundreds of thousands, if not millions. After lifting Bitcoin from its December lows, it’s not certain whether they would take this opportunity to dump their coins, or continue trying to push prices higher.