Bitcoin took a nosedive Wednesday, slashing more than $1,000 off its price tag in less than 24-hours. Ethereum, Bitcoin Cash, and Litecoin got hit just as hard, with each losing 20%+ this week.
The crash followed Bakkt’s long-awaited launch of physically-settled Bitcoin futures trading. With just 28 contracts traded at the end of day one, some blamed Bakkt's underwhelming performance for Bitcoin's sell-off.
Experts are also pointing fingers at CME’s Bitcoin futures contracts. New research has highlighted a “striking systematic trend” between Bitcoin price movements and CME futures expiration dates.
According to Arcane Crypto, Bitcoin’s price falls on average 2% ahead of CME futures settling, and the price has dropped 15 out of 20 times.
Coincidence? Arcane Crypto’s Bendik Norheim Schei says it's statistically unlikely. “With approximately the same number of positive and negative days over the period, there is less than 2% probability of observing 15 (or more) days of price drops out of 20 possible,” wrote Schei.
Bakkt vs. CME
Different than Bakkt’s physically-settled Bitcoin contracts, CME contracts are settled in cash, making them more susceptible to manipulation. Schei suggests Wall Street is hedging their risks by taking a long position on “physical” Bitcoin in the spot market and a short position on Bitcoin futures contracts. This way, traders secure their investment against price fluctuation.
While the research found no evidence of “deliberate manipulation,” some are hoping Bakkt’s launch will decrease the influence of CME contracts on the market.
Minutes after the launch at 12:00 UTC, the first Bakkt/ICE futures contract changed hands at $10,115. The number of contracts in the first hour stood at just 5 total. At press time (10 or so hours later), 28 contracts had been traded, with just one at a sub-$10,000 price. Read more.
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Facebook’s digital currency has come under fire from governments worldwide since its whitepaper appeared several months ago. High-profile regulatory hearings have so far failed to quash the negative reactions; governments fear Libra will undermine fiat currency systems. Read more.
Africa is set to be the next battleground for major crypto asset exchanges, as the conditions on the continent are favorable for virtual currency, and as a leading economy, South Africa could lead the charge in this digital transformation. Read more.
The lightning-friendly Fold App, which allows users to spend bitcoin on goods like clothes and pizza and then earn bitcoin-back rewards, just added fiat capability after raising its first round as an independent startup. Read more.
Nick Tomaino, a former Coinbase employee who launched one of the first crypto investment funds, announced on Wednesday that his firm, 1Confirmation, has raised $45 million for a second fund. Read more.
Congress wants the Financial Crimes Enforcement Network (FinCEN) to up its internal blockchain game with a new bill to study how the technology could be adapted for law enforcement. Read more.