Recent findings reveal that futures contracts on CME have had a plunging effect on the price of bitcoin most of the times. According to a report from Arcane Research, bitcoin and cryptocurrency analysts found out that bitcoin drops about 2.27% in price on an average ahead of CME’s monthly settlements.
Bitcoin Price is Manipulated Ahead of Monthly Futures Settlement
Analysts at Arcane Research have reasons to believe that bitcoin’s repeated price drop ahead of monthly futures settlement at CME can’t merely be a coincidence. Explaining the possible situation, Arcane’s Bendik Norheim Schei wrote,
“Statistically, it is highly unlikely that the price falls in advance of CME settlement should be caused by mere coincidence,”
“The figures thus support a hypothesis that the bitcoin price is manipulated in advance of CME settlement. However, the figures do not say anything about deliberate manipulation or, for example, only a result of investors’ strategy of hedging…”
Schei also says that the fact that CME’s bitcoin futures are settled in cash and not in bitcoin makes this market rife for speculation
“These futures contracts are optimal for manipulation. They are settled in dollars and not in bitcoin. The price for the settlement is determined by the bitcoin price in the underlying market. Thus, it is never actual bitcoin that change hands, and it is just an overlying market traded in dollars.”
How Is Bitcoin Price Manipulated?
Although the results of the research do not entirely reveal the mechanisms involved in the suspected price manipulation, the fact that CME settles its monthly futures contracts in USD makes it possible for speculators and traders to bet against the price of bitcoin.