What’s Going On?
“Gut wrenching” devaluations in bitcoin – including yet another drop of around 20 percent last week – may be due to the expiration of futures linked to the cryptocurrency.
Why Does It Matter?
Wall Street analyst Thomas Lee, Head of Research at Fundstrat Global Advisors, flagged the possibility that Bitcoin futures could play a role in the cryptocurrency’s price problems in a note last week, reported Bloomberg.
Business Insider said Lee has previously been bullish on Bitcoin – in February this year he predicted the cryptocurrency would “make a comeback for the ages” and be back to record highs by July.
So What’s Changed?
Lee said there is “significant volatility” in Bitcoin’s price around the expiration date of CME Group and Cboe futures contracts, reported Business Insider. CME Group and CBOE launched bitcoin futures products in December when bitcoin was in the height of its bull run and priced around $20,000, it was noted, but the cryptocurrency has steadily devalued since then.
Lee’s report also cites Justin Saslaw’s theory that Bitcoin appears to fall into expiration, reported Bloomberg. There have been six expirations since the Cboe Bitcoin futures contracts launched, it was noted, including one on June 13. Lee’s interpretation raises the prospect bitcoin could be manipulated via futures contracts, said Business Insider.