Is Manipulation Affecting Bitcoin's Price or Is the ETF Inflows' 'Small' Impact a Coordinated Strategy?
Bitcoin ETFs have seen record inflows, with 17 consecutive days of net additions. On one notable Tuesday, ETFs saw $886.6 million in inflows, the second-highest single-day amount since their inception. The following day, inflows continued with $488.1 million, fueled by major players like Fidelity ($220.6 million), BlackRock ($155.1 million), and Ark ($71.4 million). Despite this massive capital influx, Bitcoin's price has only slightly increased, moving from $68,000 to $71,000 last week.
This muted price reaction has puzzled many. Typically, such inflows would push Bitcoin prices significantly higher. However, analysts suggest other factors are countering the upward pressure.
Crypto analytics platform The Kingfisher explained on X that a carry trade strategy might be influencing Bitcoin's price. They noted, “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.”
A carry trade involves shorting Bitcoin futures while buying spot Bitcoin or Bitcoin ETF shares, hedging against price volatility and exploiting price discrepancies.
JJ the Janitor (@JLabsJanitor) elaborated, suggesting that big players use this strategy to fill spot orders by selling futures contracts. Once filled, they close the shorts, impacting the price correlation.
His follow-up, “Market manipulation or savvy investment strategy….what’s the difference?” raises ethical questions about these tactics.
X user Sahra critiqued the practicality of the carry trade, pointing out, “Carry trade should suppress funding rates naturally... these rates are far too low to justify a carry IMO.”
The Kingfisher acknowledged this anomaly, suggesting other factors like bullish sentiment or additional buying pressures might be offsetting the expected downward pressure from the carry trade.
What do you think?
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