Bitcoin (BTC) continues to be volatile today, decreasing by 0.70% in the past 24 hours. The decline of this asset has raised concerns among traders.
However, some analysts argue that the performance of Bitcoin may be due to potential price adjustments, citing the recurring patterns of declines around the opening of the U.S. market and the involvement of various institutions.
Manipulation within and the overall market: Decoding the drop of Bitcoin.
Bitcoin has disrupted all bullish predictions in the fourth quarter, which has historically been a strong period for this asset. However, when the market crashed on October 10, it was a key factor behind BTC's decline in early quarter. Market participants are questioning whether this weakness persists.
Traders are increasingly dissatisfied that Bitcoin is not responding to market developments. For example, yesterday Strategy (formerly known as MicroStrategy) announced that it bought 10,624 BTC worth 962.7 million USD
Despite this bullish news, Bitcoin remains in negative territory today, down 0.70% and trading at 90,487 USD.
Conversely, negative developments continue to drive the same selling pattern. Analyst Ash Crypto points out that the market continues to exhibit inappropriate behavior and does not respond to positive developments as usual.
In a separate post, Ash suggested that the drop of Bitcoin from 126,000 USD to 80,000 USD cannot be viewed as a normal market correction. He noted that since the market crashed in October and the historic bankruptcies:
U.S. stocks rose 8%, with several stocks hitting new all-time highs.
Nonetheless, Bitcoin remains 29% below pre-collapse levels, and the short-term recovery has been heavily sold off.
There have been bankruptcies of approximately 500 million USD occurring almost daily due to forced selling
"If it were just a swing, it should have been very short-lived and the market should have recovered quickly, but instead, we sold off without any recovery at all. This is unusual. It looks like some big institutions are playing games with the market and selling both longs and shorts. Another rumor in town is that many large funds had issues on October 10 and they are selling BTC to cover their losses," he said.
Additionally, other analysts point to Bitcoin's price movements over the weekend as evidence of manipulation. Recently, a post revealed that this cryptocurrency dropped from approximately 89,700 USD to 87,700 USD temporarily, causing liquidations in longs of about 171 million USD.
Several hours later, the movement reversed immediately, causing Bitcoin to spike to about 91,200 USD and liquidate positions in shorts by another 75 million USD.
"This is another example of manipulation during the low liquidity weekend to eliminate both leveraged longs and shorts," Bull Theory wrote.
Is Jane Street behind the Bitcoin drop this morning?
Moreover, market observers have noted a trend that Bitcoin often drops sharply around 10:00 AM after the U.S. market opens. Additionally, this pattern has persisted since early November and resembles activities seen earlier in the year.
This consistency suggests a systematic approach rather than a random response. Bull Theory points to Jane Street, a major high-frequency trading firm, as a possible source. Jane Street reports holding over 2.5 billion USD in BlackRock's IBIT ETF, making it the fifth largest position.
"Looking at the chart, this pattern is too consistent to overlook: a clean wash within an hour after the market opened followed by a slow recovery. That is classic high-frequency trading behavior, which means that the drop in BTC is largely not due to macroeconomic weakness, but rather due to manipulation by a major player," one analyst explained.
The suspected strategy is simple. High-frequency traders dump BTC when the market opens, pushing prices down into a liquidity pocket, then buy back at lower prices. They repeat this cycle, harvesting profits from predictable volatility and accumulating billions in Bitcoin.
This is called wash trading, which has been illegal in the stock market since 1933. There are no laws in crypto allowing them to do this until the Market Structure Bill passes. The problem with tracking Jane Street is that they do not operate on-chain; they do it through ETFs. We cannot track their movements. Wintermute operates on-chain with Binance, but Jane Street is relatively opaque, as Marty Party pointed out here.
However, analysts believe that the impact may be temporary. Once the major players finish their accumulation phase, Bitcoin may return to an upward trend driven by fundamentals.
