records, rising to the level of $8,082. On November 20, 2016, Bitcoin showed a maximum of $760. It turns out that the price increase in percentage was 1063% in one year. There were several reasons for this: On April 1, 2017, Japan officially recognized Bitcoin as a means of payment. In addition, options on futures and ETFs became the main topics in the news (CBOE expected to start trading in Bitcoin futures on December 10, 2017). Investments in Bitcoin became available to everyone: from banks and insurance companies to governments. ²⁰ I think this is just incredible growth. No asset is capable of such growth.
In early December 2017, the US Futures Trading Association requested the regulator to cancel the start of Bitcoin futures, since the use of a self-certification scheme for such new products “does not correspond to the potential risks that underlie such trading.” It is believed that the US Futures Trading Association lobbies the interests of large banks and brokers, including Goldman Sachs, Morgan Stanley, JPMorgan and Citigroup.²¹ And yet, I doubt that the leaders of these financial organizations did not know what effect the start of Bitcoin futures trading would have on the Bitcoin price.
On December 10, 2017, the largest US options exchange, CBOE Global Markets (it accounts for more than 51% of option trading in the United States and 91% of all index options) launched trading in Bitcoin futures. After 10 minutes, the site of the exchange “fell” under the onslaught of an incredible number of visitors. The leaders of many of the largest banks were seriously concerned about such a loud arrival of Bitcoin on Wall Street. As you know, some bank leaders and industry leaders have publicly ridiculed Bitcoin in recent months, calling it a bubble, a pyramid, banal fraud, and a “money laundering index.” Now imagine that these same investment banks start helping clients to invest in cryptocurrencies – this could be a serious blow to the reputation of the bank.
Bankers are frightened by Bitcoin’s volatility, which is a serious danger for the bank – its price can change dramatically in a few minutes, and there is no accepted model to account for it on the balance sheet.
The letter from the Futures Industry Association, which appeared in early December, said that the CBOE and the CME Group begantrading in Bitcoin futures without proper consideration of risks. ²²
Earlier, analysts noted that the launch of Bitcoin futures could lead to the collapse of the cryptocurrency rate as large institutional investors (banks, insurance, investment funds, etc., that is, financial giants who have many years of investment experience) can start playing on lowering. However, the Bitcoin rate for the morning of the next day was $16,231 at the Bitfinex exchange. The first day of trading on CBOE Global Markets for Bitcoin futures went well. By the end of the day, 3969 contracts were sold and purchased. During the day, futures went up by $3,545 to $18,545. The price of Bitcoin also increased. ²³ Everything seems to be going well.
But after a few days, Stephen Gandel (Bloomberg columnist) noted: there are already some signs that not everything is going smoothly. There was a decrease in the price of the January contract by $815, and the trading volume decreased several times. They were wary of a constant and unusually large gap between the price of Bitcoin and futures contract. ²⁴
On December 17, 2017, the weighted average rate of the most popular cryptocurrency in the world, Bitcoin, reached a new psychological mark of $20,000 with a capitalization of $334.5 billion. But at 5:00 pm on the same day, the first trading in Bitcoin futures at CME began. Already on December 19, the price of Bitcoin began to plummet.
Many people believe that Bitcoin futures were created in order to keep the price and prevent ordinary people from getting rich, as well as to keep stocks and bond markets at a high level. Fiat currency should not lose its value. In addition, all conditions must be created so that large investors can buy at a low price.
Is there a Cartel?
The version with the artificial collapse of the cryptocurrency market has long ceased to be a theory from the sphere of the universal conspiracy.
There is even an opinion about the existence of a certain “Cartel” which includes the most influential people of the planet and financial giants. It is believed that they decided to subjugate the decentralized cryptocurrency themselves to sow panic, and provoke a massive sale of Bitcoin for its subsequent purchase. After all, it is not surprising: in connection with the rush around Bitcoin, there were many interested parties in its acquisition, including institutional investors. This resulted in an outflow from the stock market. In addition, ordinary people were able to get rich with the help of Bitcoin. Financial giants didn’t want it. Only the favorites can be in the circle of the favorites.
I can not say with certainty that the Cartel exists. But, if you think carefully and look at the graphics, it is quite likely. Although there is a more popular and accepted opinion that the price reduction is nothing more than the usual correction.
But here are some more thoughts of another cryptoinvestor.
He says that institutional investors expect regulation and understandable instruments in the crypto market. And now every crypto holder hopes that institutional investors are about to enter the market, and the BTC will fly up. But the less people on board the ship, the greater the income of the giants, so they definitely will not tolerate extra ones on board.
In order to knock out the weak, they have methods that have long been proven in other markets.hTey are not in a hurry; they act in cold blood and with the help of a knurled pattern.
Phase 1. Sharp price reduction.
Media is bought, the first impulse movement is being made, and then panic takes the weakest hands out of the market. This phase was from mid-December 2017 to early February 2018.
Phase 2. Lateral movement.
After the completion of the first phase, recovery takes place; many are overbought, and another dump goes on, which goes into long-term lateral movement. The purpose of this long-term lateral movement is to squeeze the rest of the holders. For institutionalists, half a year or a year is not a deadline at all; this is an instant, they don’t need to buy food with this money, unlike ordinary people, so they are ready to wait in cold blood while the others literally eat up their deposits.
Phase 3. Flaccidity.
After the lateral movement, ordinary investors lose interest in the cryptocurrency. Requests in Google are at the minimum values, and HYIP finally fades away. Leaders of crypto opinions, experts and bloggers are beginning to change their position. At this time, even strong investors sell out. ²⁵
He sums up that the institutionalists entering the market do not at all want to make us rich; we are competitors for them. He believes that the excitement around cryptocurrencies will flare up with even greater force only after the institutions themselves enter this market.
He also says the following: “If you have a depressed emotional state from a drawdown, then this is normal, as it is caused more than once by a worked-out scheme. Shift the focus from the fact that the rate falls to those earning opportunities that the market now opens before us.” ²⁵
To understand in more detail what is what, and whether there is a probability of the existence of the Cartel, let’s return to the main events that have occurred in the world of cryptocurrencies since the beginning of 2018.
On January 23, 2018, the rate of the most popular cryptocurrency dropped to $9 955 on the Bitfinex
