Is The Bitcoin Price Manipulated? Experts Explain ‘Small’ Impact Of ETF Inflows

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Bitcoin price manipulation

The US spot Bitcoin Exchange-Traded Funds (ETFs) have been witnessing a historic run of inflows, marking 17 consecutive days of net additions. On a particularly notable Tuesday, these ETFs observed inflows totaling a staggering $886.6 million, ranking it as the second-highest single-day influx since their introduction.

This was followed by another significant day of inflows yesterday, amounting to $488.1 million, with notable contributions from major financial players like Fidelity ($220.6 million), Blackrock ($155.1 million), and Ark ($71.4 million). Despite these hefty capital injections, the price of Bitcoin has demonstrated a relatively subdued response, inching from $68,000 to $71,000 since the beginning of the week.

The muted price movement in the face of substantial ETF inflows has puzzled many market participants and analysts. Typically, such inflows are expected to exert a stronger upward pressure on Bitcoin prices. However, the observed price dynamics suggest that other counteracting factors might be at play.

Why Is The Bitcoin Price Not Going Higher?

Crypto trading analytics platform The Kingfisher offered an explanation via a post on X, suggesting that a carry trade strategy might be influencing the price dynamics. According to their analysis, “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 in this context involves shorting Bitcoin futures while simultaneously buying spot Bitcoin or Bitcoin ETF shares. This strategy can hedge against potential price volatility and exploit discrepancies between futures prices and spot prices.

JJ the Janitor (@JLabsJanitor) further elaborated on the strategy’s mechanics. He drew parallels with behaviors visualized on the PANDA Terminal charts, explaining, “When big boys want BTC spot filled they sell futures contracts to bring price into bids. When they’re filled + ready to let it rip they close those shorts, hence the inverse correlation on True Open Interest (OI).”

His remarks hint at strategic market manipulations that, while legal, blur the lines between savvy investment tactics and potential ethical concerns. His follow-up tweet, “Market manipulation or savvy investment strategy….what’s the difference?” challenges the narrative by questioning the ethical implications of such strategies.

The discussion prompted further scrutiny from the crypto community. X user Sahra critiqued the practical implementation of the carry trade, noting, “Carry trade should suppress funding rates naturally. Long spot pressure against the perpetual should in theory cause perpetual rates to drop (all else being equal) as perpetual would begin to lag spot. Everything else makes sense, but these rates are far too low to justify a carry IMO.”

This comment points to the complexities of carry trades, where expected outcomes like suppressed funding rates are not aligning with market observations, suggesting that other forces might be influencing the market.

The Kingfisher responded to Sahra’s skepticism, acknowledging the anomaly: “That’s right, the funding remains fairly positive though. This suggests that while a carry trade could be in play, it’s not the dominant force in the market. Other factors, like bullish sentiment or other buying pressures, might be offsetting the expected downward pressure on funding rates from the carry trade.”

At press time, BTC traded at $70,803.

Bitcoin price
Bitcoin price stalls at $71,000, 1-day chart | Source: BTCUSD on TradingView.com

Featured image created with DALL·E, chart from TradingView.com

Jake Simmons

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field. His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone. With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage. Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control. For Jake, Bitcoin represents more than just an investment; it’s a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality. As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies. In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time. You can engage with his latest takes on Twitter: @realJakeSimmons.

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