Cryptocurrencies

WilShire Phoenix Fund lays a paving stone in the Mare – Cryptocurrencies

WilShire Phoenix investment fund released a report claiming that the Chicago Mercantile Exchange (CME) Bitcoin-backed Futures financial products have a greater impact on the price of Bitcoin than the “spot” market. This role reversal is absolutely not normal. WilShire Phoenix launches a big cobblestone in the pond …


Back to the Future

Before detailing the important points of the report, let’s recall what the head of the CME had said shortly before launching the Bitcoin-backed Futures:

“We’re going to tame Bitcoin”

Leo Melamed / source coindesk

Need we say more to guess the intentions of Leo Melamed, boss of CME, lwho has never hidden his hostility towards Bitcoin …

Let us also recall in passing the words of Christopher Giancarlo in 2019. The former chief of the CFTC (Commodity Futures Trading Commission), the financial policeman in charge of Futures regulation, said:

“One of the untold stories of the past few years is that the CFTC, the Treasury, the SEC and the director [du Conseil économique national] of the time, Gary Cohn, predicted that the introduction of bitcoin futures would cause the bitcoin bubble to burst. And it worked. ”

Christopher Giancarlo / source coindesk

Although qualifying as “ bubble “The price level reached by Bitcoin in 2017 is wrong, the idea that the US government (and the banking lobby which is obviously behind) activated behind the scenes to sink Bitcoin is absolutely believable. After all, given the exorbitant privilege the United States derives from owning the international currency, it is very easy to see why the US government wanted to fight a direct competitor to dollar dominance.

Here are some examples of the impact of an introduction of Futures in different markets such as Bitcoin, Uranium, Silver and Gold:

Uranium price / source: supercrypto
Red line: date of the launch of Futures
Gold price / source: supercrypto
Red line: date of the launch of Futures
Silver Futures
Silver price / source: supercrypto
Red line: date of the launch of Futures

The launch of Futures is very often a powerful sell signal, as if investors knew that the unacknowledged role of Futures is mainly to keep the price of commodities at the bottom

And here’s for Bitcoin:

Bitcoin and CME Futures Launch Date
Bitcoin price / source: supercrypto
Red line: date of the launch of Futures

WilShire Phoenix

The fonds notes several interesting facts and in particular that Bitcoin-backed Futures trading volumes are now higher than those of the exchanges the CME uses to track the price of Bitcoin (Coinbase, ItBit, Bistamp, Gemini, Kraken). These Exchanges together represent approximately 57% of global trading volume on BTC / USD according to WilShire Phoenix.

Pub

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.

The fund then does a small volume comparison with the gold market. According to data from the World Gold Council (WCG), the daily volume of Gold Futures on the COMEX is $ 30 billion while that of the spot gold market is 167 billion. Or 17%. Conversely, the daily volume on BTC Future is $ 90 billion versus $ 190 billions in the spot market. Or 60%.

It should raise eyebrows. Especially when we know that the JP Morgan has just been convicted of having manipulated the price of gold for a decade thanks to the Futures market … And this while daily volumes only represent 17% of the spot market! There is something to ask questions for Bitcoin …

WilShire Phoenix infers that the Futures market is now the main driver of the price of Bitcoin due to its trading volumes greater than those of the spot market (on exchanges):

“The average transaction size on the CME (Futures) futures market facilitates its dominance in BTC price formation compared to Coinbase, ItBit, Bistamp, Gemini and Kraken exchanges. “

WilShire Phoenix

The report also does not forget to note that CME’s BTC Futures do not allow Bitcoin to be physically delivered. Unlike any other Futures market … If you buy an Oil Backed Future, you always have the option to have it delivered physically this oil. Not for Bitcoin.

This financial absurdity allows create as many Futures (BTC in paper form) as needed to weigh on the price of Bitcoin. And this without ever having to actually own Bitcoin. Kafkaesque …

Only Bakkt offers Futures offering genuine Bitcoins to those who wish to be delivered when the Future contract expires. However, its volumes are only a tiny fraction of those of the CME.

CME BTC Futures volumes
Volumes on Bitcoin-backed Futures CME have risen sharply in recent months

Who is behind Futures?

Among the investment funds apparently making rain and shine in the Futures market (and therefore in part on the price of Bitcoin), WilShire Phoenix notes three names: Wedbush, Macquarie, and R.J. O‘Brien. Three investment funds known to have had trouble with the law and which were sentenced to pay millions of dollars …

Pub

Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.

Finally, note that there are consistently more sellers than buyers on the CME. Sellers are always big fish such as investment funds … while individuals and lone traders are always on the upside. You can check the official data here …

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