cryptocurrency, bitcoin, ethereum, crypto
Bitcoin (and all crypto) got a nice mid-January bloodbath, shedding around $8,000 (nearly 50%) over a few days.
A few crypto pundits arguing the cause is futures market muckery; the first Bitcoin futures expired January 17.
BTC had been trading in the mid-to-high $10,000s in the weeks leading up to that expiration, but dropped during the few days right before it. The first expiring BTC futures contract was set for $10,900, so any owner of that first round of futures had an interest in seeing BTC tank from its $17k highs.
The crypto markets right now are quite pure, due to their relative young age and light regulation. Pure in the sense that institutional actors like banks aren’t calling the shots. That, however, doesn’t mean these markets aren’t susceptible to manipulation.
The upside of this pure market state means banks aren’t using their weight to move the market to their will (yet).
The downside is . . . other actors may be.
The recent discovery that BTC’s 10x price surge in late 2013 may be attributable to one person that programmed to bots to ping-pong BTC transactions and drive up price is a good example.
So while we can’t say for sure, it’s possible that whale investors that owned BTC futures catalyzed the mid-January crypto bloodbath to cash in on those futures.
The second round of futures (CME) expires January 26. And the CME contracts are tied to five Bitcoins, while the CBOE were tied to only one. So the stakes are higher.
We’ll have to test this theory by seeing if Thursday and Friday have another dip in store. If it holds, scheduling BTC futures expirations could be a good way to trade going forward.
This, combined with South Korea’s recent re-assertion that it is banning anonymous crypto exchanges on January 30 gives lots of justification for BTC to drop in the upcoming days. Stay tuned.