Is The Bitcoin Price Manipulated? Experts Explain ‘Small’ Impact Of ETF Inflows
June 06 2024 - 3:45AM
NEWSBTC
The US spot Bitcoin Exchange-Traded Funds (ETFs) have been
witnessing a historic run of inflows, marking 17 consecutive days
of net additions. On a particularly notable Tuesday, these ETFs
observed inflows totaling a staggering $886.6 million, ranking it
as the second-highest single-day influx since their introduction.
This was followed by another significant day of inflows yesterday,
amounting to $488.1 million, with notable contributions from major
financial players like Fidelity ($220.6 million), Blackrock ($155.1
million), and Ark ($71.4 million). Despite these hefty capital
injections, the price of Bitcoin has demonstrated a relatively
subdued response, inching from $68,000 to $71,000 since the
beginning of the week. The muted price movement in the face of
substantial ETF inflows has puzzled many market participants and
analysts. Typically, such inflows are expected to exert a stronger
upward pressure on Bitcoin prices. However, the observed price
dynamics suggest that other counteracting factors might be at play.
Why Is The Bitcoin Price Not Going Higher? Crypto trading analytics
platform The Kingfisher offered an explanation via a post on X,
suggesting that a carry trade strategy might be influencing the
price dynamics. According to their analysis, “The BTC ETF inflows
didn’t affect the price as much as you hoped it would? It might be
due to a carry trade being loaded up. Short Futures + Buy
Spot/ETF.” Related Reading: Bitcoin Price Soars Past $71,000:
Here’s Why A carry trade in this context involves shorting Bitcoin
futures while simultaneously buying spot Bitcoin or Bitcoin ETF
shares. This strategy can hedge against potential price volatility
and exploit discrepancies between futures prices and spot prices.
JJ the Janitor (@JLabsJanitor) further elaborated on the strategy’s
mechanics. He drew parallels with behaviors visualized on the PANDA
Terminal charts, explaining, “When big boys want BTC spot filled
they sell futures contracts to bring price into bids. When they’re
filled + ready to let it rip they close those shorts, hence the
inverse correlation on True Open Interest (OI).” His remarks hint
at strategic market manipulations that, while legal, blur the lines
between savvy investment tactics and potential ethical concerns.
His follow-up tweet, “Market manipulation or savvy investment
strategy….what’s the difference?” challenges the narrative by
questioning the ethical implications of such strategies. Related
Reading: Bitcoin Will Explode If Bulls Break The “Fuse” At $72,000
The discussion prompted further scrutiny from the crypto community.
X user Sahra critiqued the practical implementation of the carry
trade, noting, “Carry trade should suppress funding rates
naturally. Long spot pressure against the perpetual should in
theory cause perpetual rates to drop (all else being equal) as
perpetual would begin to lag spot. Everything else makes sense, but
these rates are far too low to justify a carry IMO.” This comment
points to the complexities of carry trades, where expected outcomes
like suppressed funding rates are not aligning with market
observations, suggesting that other forces might be influencing the
market. The Kingfisher responded to Sahra’s skepticism,
acknowledging the anomaly: “That’s right, the funding remains
fairly positive though. This suggests that while a carry trade
could be in play, it’s not the dominant force in the market. Other
factors, like bullish sentiment or other buying pressures, might be
offsetting the expected downward pressure on funding rates from the
carry trade.” At press time, BTC traded at $70,803. Featured image
created with DALL·E, chart from TradingView.com
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