Recent results show that most often had a falling impact on bitcoin prices. Arcane Research reports that bitcoin and cryptocurrency analysts have found that bitcoin is declining by an average of about 2.27% on average before CME’s monthly settlements.
The price of Bitcoin is manipulated before the monthly futures settlement
Analysts at Arcane Research have reason to believe that the repeated decline in bitcoin prices prior to the monthly settlement of CME may not be merely coincidental. Explaining the possible situation, Bendik Norheim Schei of Arcane wrote
“It is statistically highly unlikely that the price decrease will be caused by mere chance before the CME is settled”
“The data thus support the hypothesis that the price of bitcoin is manipulated before the CME is accounted for. However, the numbers say nothing about deliberate manipulation or, for example, only as a result of investors ’hedging strategies…”
Schei also says that the fact that CME bitcoin deadlines are settled in cash rather than bitcoin is flooding this market with speculation.
“These futures contracts are optimal for manipulation. They are accounted for in dollars and not in bitcoin. The settlement price is determined by the bitcoin price of the underlying market. So never the actual bitcoin changes hands, and it’s just a dollar trading market. ”
How is the price of Bitcoin manipulated?
Although the results of the research do not fully explore the mechanisms of hypothetical price manipulation, the fact that CME settles its monthly futures contracts in USD allows speculators and traders to bet on the price of bitcoin. On a monthly basis, towards the settlement period, it is suspected that traders are trying to play the system by shorting bitcoin.
Recent occurrences of alleged price manipulation
Over the past two years, from January 2018 to August 2019, the analysis shows that the bitcoin exchange rate showed a declining trend in 15 of the 20 months examined before the settlement of CME futures. According to the analysis, the price increase of bitcoin was only 5 months (2018-2019: April, September, December, March, July) before such a settlement period. In the remaining months, bitcoin fell by an average of 2%.
Analysts are also considering the situation. In an eToro Daily Market Updates newsletter, senior analyst Mati Greenspan says that as the volume of these contracts was particularly high this week – 142,340 BTC as of Monday, Bitcoin’s exchange rate could experience high volatility at the end of the month.
, in his tweet today, noted that bitcoin bounced back every time it crashed due to CME’s futures settlement. He also pointed out that there is a trend reversal in the price of Bitcoin after the expiration of CME’s futures contracts on Friday.
Since March 2019, CME Futures expired at the end of the month.
Each time, before exhaling, the BTC dipped. While after the deadline, BTC turned around!
CME Futures expires tomorrow, which means a change of direction is imminent!
– Crypto Welson? (@CryptoWelson)
What is different from Bakkt Bitcoin Futures?
Many market watchmakers hope that Bakkt’s physically balanced bitcoin futures will divert investors from investing money in cash-settled contracts, thereby reducing the scope for price manipulation. Mati Greenspan is of the opinion that the reason for the recent price drop was the introduction of “a unique price discovery that only means having a regulatory option to trade bitcoin directly for US dollars”. CME, although a regulated stock exchange, was only able to partially solve the problem of price discovery because its contracts were settled in cash. He also suggested that unregulated stock markets may have kept the Bakkt price up and fluctuating.
However, Bakkt started rather slowly, and in terms of the volume of bitcoin trading, the development over the past few days has not been impressive. Therefore, it remains to be seen whether the adoption of Bakkt will help to minimize the alleged price manipulation associated with CME bitcoin futures.
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