The Bitcoin 'BearWhale.' Billy Mabrey

In an epic battle, bitcoin believers slayed a $9 million BearWhale on Monday morning. If none of that made sense, here's the skinny: Someone posted a limit order to sell 30,000 bitcoins at $300 each—well below the mid-300s price level the cryptocurrency had been trading at throughout the weekend. In the still-nascent market, an order of that size spooked the market, sending prices plummeting to levels not seen since last November. Since the incident, bitcoin has risen about 25 percent to $375, according to CoinDesk. Bitcoin traders almost immediately named the seller "BearWhale," and the name proliferated quickly throughout social media. And although he was eventually defeated—the order was cleared after making a remarkable pattern in the bitcoin price chart (below)—the community of cryptocurrency enthusiasts has begun to mythologize the incident, creating artwork and poetry in honor of the battle. Not only are they proud of successfully pushing against this perceived bearishness, but also no one can really figure out why the BearWhale emerged to begin with.

This chart, and the story behind it have inspired a host of online discussions (and T-shirts): Click here for VeyBtc tweet. Click here for ActualAdviceBTC tweet. But many of the discussions on Reddit and elsewhere are simply trying to figure out why someone would seek to sell such a large sum of bitcoins below the current market value. "It was a very immaturish way to liquidate that amount of coin," said Brendan O'Connor, managing director for trading at SecondMarket. Adding that the resulting market dip "ruined my Sunday," O'Connor explained that as far as he and his team can tell, someone put the sell order on Bitstamp—Europe's biggest bitcoin exchange—and then removed it and replaced it several times. Ultimately, he said, the trader was able to sell roughly 26,000 bitcoins for about $7.8 million. Read More Bitcoin tanks, is Alibaba to blame?

"I have to tell you, it doesn't make any sense at all from a trading standpoint," O'Connor said. "It's the last way in the world you would actually want to liquidate a large position like that."

Although the BearWhale may have left some money on the table, observers suggest that this may have been simply the easiest way to realize quick liquidity. Tony Gallippi, co-founder and executive chairman of BitPay—he also trades bitcoins as part of the company's instant exchange service—said he thinks the strategy was "pretty well executed" because it caught people's attention and drew new or infrequent buyers into the marketplace. With the new buyers, the whole order was filled relatively quickly, and that may have been the point of the strategy, he said. Read More Bitcoin tumbles—are investors losing faith?

Some, though, have alleged that something more nefarious is behind the market actions, with theories from law enforcement agencies liquidating their seized holdings to market manipulation on the part of one or more of the exchanges spreading online. These probably are not the case, though, experts said. O'Connor said he thinks the now-infamous trader was probably just someone from a computer science background who got into the digital currency early and did not have a strong background in trading. This assertion is backed by forensics on the specific coins for sale which showed that they had been stationary for over a year—implying the BearWhale was an early adopter, Gallippi said.

Beyond the BearWhale: Bitcoin's slide