Bitcoin Falls 9% To Go Below $4,000 Again As CME Bitcoin Futures Expire
Many CME Bitcoin futures contracts are expiring today. Unfortunately, this may have caused some impact on the Bitcoin market as the token has fallen behind $4,000 USD again at the time of this report.
The CME Bitcoin futures contracts expire on the last Friday of each month. Therefore, all the contracts were terminated today. This creates a sort of a cycle in which the prices always take a hit at the end of the month. There have been only a few exceptions this year like February when the bear market was simply not so strong yet.
Tom Lee, from Fundstrat, has explained how the end of the contracts is connected to the price of Bitcoin in May. According to him, if a trader is long Bitcoin and shorts the futures, holders can end up selling a large share of the tokens to minimize tracking error. When the expiration date is near, they may end up selling the remaining Bitcoin and this can cause the major price drops.
It happens, according to the economist from Fundstrat, because they are leaving a short position in the futures to close with a handsome profit.
End of Month Causes Prices To Go Down
As it was explained, this means that there is a big chance that the prices will go down and be shorted at the end of each month because some contracts always are expiring at the ends of months. This impacted Bitcoin, which was 12% up and dropped down again. At the time of this report, Bitcoin is worth $3,975 and it is almost at the $4,000 USD mark again.
This is a pretty good sign as it shows that the coin may regain some of its value. Some economists are not so happy, though, as they believe that there is a chance that Bitcoin may end up seeing the low end of the $3,000 USD mark and even see its price going as down as the $1,000 USD mark.
Fred Wilson, for instance, used his experience as a venture capitalist to affirm that crypto assets are down 80 to 95% in the United States and that they can go even lower if the market does not turn around.
He believes that cryptos will follow Amazon. They will really hit rock bottom now and then they will build up value and end surviving, but that will certainly take quite a lot of time. However, the prices going up again are certainly making some investors be more confident and there is a chance that the token might finally see a recovery as expected.