Institutional Investors are Manipulating the Price of Bitcoin: Arcane Research Report
In September, Bitcoin price took a hit of over 19%. It went from its highest point of $10,930 on Sept. 6 and dropping to almost $7,730 on Sept. 26.
On Sept. 27, the day CME BTC futures contracts settled, the price went under $8,000 for the first time since June.
The drop in BTC price might be caused by institutional investors, according to Arcane Research.
Bitcoin price falls on average 2% ahead of futures contracts on CME being settled. Arcane Research has looked closely at the numbers, and the systematic trend is striking; the price has dropped 15 out of 20 times.
CME’s Bitcoin futures contracts, that are an indicator of Wall Street’s institutional interest in cryptocurrency settles in dollars and not in BTC. The settlement meanwhile is determined by the BTC price in the underlying market.
This means, no BTC changes hands rather it’s just underlying market trading in dollars while allowing Wall Street traders to go long or short on BTC futures contracts.
On settlement date of the contracts, traders can sell off their BTC and potentially trigger a price drop in the spot market.
This allows traders with short positions to earn profit on futures contracts upon settlement as the value of their position rises.
A Clear & Striking Trend in BTC Price & CME BTC Futures Settlement
According to Arcane Research’s analyzation, the trend is “striking.”
On an average Bitcoin falls 2.27% towards each settlement each month in comparison to only 0.06% all on a random day.
The trend becomes even clearer on looking at the median, on any random day, the fall is of 0.04% while before settlement, price takes a drop of 1.99%.
Moreover, there is an even relationship between positive and negative days while just the day before the settlement, only 25% of the days were positive.
Interestingly and oddly, BTC price falls the most before settlement, this was particularly seen this spring.
The data supports the hypothesis that
“the bitcoin price is manipulated in advance of CME settlement.”
However, it doesn’t say anything about “deliberate manipulation.”