Analyst with wall street and co-founder of Fundstrat Global Advisors Tom Lee is convinced that the reason for the rapid fall in the price of the first cryptocurrency last week was the expiration of bitcoin futures.
Bitcoin futures may be fueling the “gut-wrenching” declines, Tom Lee says https://t.co/nUoCSBgiLY pic.twitter.com/WnAPG890fo
— Bloomberg Crypto (@crypto) June 14, 2018
Li noted that since the launch of XBT futures on the Chicago Board options exchange (CBOE) held six of the expiration of contracts. The last such event occurred on 13 June. That day, the average rate of bitcoin has fallen by $300 — from $6600 to $6300.
We will note, within ten days prior to the expiration of contracts, the price of bitcoin has decreased by 18%.
If traders open long positions on bitcoin and short on futures, in an attempt to minimize the tracking error in the run-up to expiry they can sell large amounts of BTC at the weighted average rate, explained Lee.
Besides, selling a significant number of bitcoins and exerting pressure on the price, they maximize the yield of short futures positions.
Lee also stressed that the inflow of capital into the cryptocurrency industry is extremely limited due to the lack of institutional tools.
Recall that in Fundstrat believe that a deep correction to $3250, where the long-term trend line from mid-2015, will not break the uptrend.