US Department of Justice is trying to take a closer look at the possibility of market manipulation on Bitcoin markets. Though it is still in its early stage, the US Department of Justice already teamed up with other agencies including Commodity Futures Trading Commission (CFTC).
Recently, there is a group of researchers that have suggested that the bearish trend in Bitcoin and the rest of the crypto market is a product of market manipulation. Is this a possible scenario or is it just a conspiracy theory?
Conspiracy Theory or Worth Taking a Second Look?
Is it a conspiracy theory that there is a possibility of market manipulation or is there something really fishy going on? Considering the fact that the crypto market is unregulated for the most part, you can’t help but wonder if there really is truth in this.
For instance, they claim that the same time Bitcoin reached almost $20,000, it was the same day that the bitcoin futures market of CME and CBOE were launched. According to the group, institutional investors and large-scale retailers opted to manipulate the market in order to cash out the short contracts by purchasing and by selling Bitcoin.
According to the group, “Bitcoin reached its all time high (ATH) on December 17th of 2017, the exact date that CME futures trading began. In retrospect, it is now obvious that smart/institutional money was stocking up before that date. Hindsight is 20/20. Since 12/17/17, Bitcoin has been in a bear market. The remainder of this analysis will focus on patterns observed during this market downturn, as well as signals for when it might come to an end”.
They also added that the crypto market experienced correction which means that the magnitude of the bearish trend declined. They are proposing that a large-scale investor, during this time, had fewer amounts of Bitcoin right after driving the major corrections. They said that: “Not only is selling volume lower, but the drops have been less severe. Each component of each leg down is less steep than the previous leg down. RSI, a momentum indicator, also shows selling has been less extreme. The trend is ‘flattening out’”.
Running Low on Bitcoin
Does it mean that the bears are at the very end these days? This could mean that whales are running out of Bitcoin to sell. And according to the researchers, the end of the downtrend is quite near. Investors can expect Bounces to be more shallow while the bottoms aren’t going to be as low. This week, Bitcoin traded below $8,000.
If you will ask experts in finance, they’d say that the premise presented by the group of crypto traders could actually be true. The large-scale investors were able to manipulate assets, commodities, and interest rates. CNBC Fast Money host Melissa Lee agreed with the group during her May 25 show saying that it has been done in the past. In addition to this, CNBC Mad Money host and fund manager Jim Cramer mentioned that large-scale investors have manipulated the stock market, which only means that there is really a chance of whales about to enter the crypto market doing their part to tweak the market according to their plan.