Bitcoin (BTC) continued its volatile trajectory, down 0.70% in the past 24 hours. The asset's drop has raised concerns among traders.
Some analysts, however, argue that Bitcoin's performance is due to possible price manipulation. They mention a recurring pattern of declines associated with the opening of the US markets, as well as institutional involvement.
Internal manipulation vs. market dynamics: Unpacking Bitcoin's decline
Bitcoin has defied all bullish expectations in Q4, a period that has historically been strong for this asset class. While the market crash on October 10 was a significant factor in BTC's decline at the start of the quarter, market watchers are now questioning the persistence of this weakness.
Traders are increasingly frustrated by Bitcoin's lack of responsiveness to market events. For example, yesterday, Strategy (formerly MicroStrategy) announced it had acquired 10,624 BTC for $962.7 million.
Nevertheless, despite this bullish news, Bitcoin is once again in the red today, down 0.70%, with a price of $90,487.
On the other hand, negative events also trigger the same selling pattern. Analyst Ash Crypto emphasized that the markets continue their irrational behavior and are not responding to positive developments as they usually do.
In a separate write-up, Ash suggested that Bitcoin's crash from $126,000 to $80,000 cannot be dismissed as a normal market correction. He noted that following the market crash in October and the historical liquidations:
US stocks have risen 8% and many stocks have reached new all-time highs.
Bitcoin is still 29% below its pre-crash levels, and short-term price rallies have faced strong selling pressure.
About $500 million in liquidations occurs nearly every other day, indicating ongoing forced selling.
“If this were just leverage, it should have been very short-lived, and the market should have rebounded quickly, but instead, we continue to decline without a significant recovery. This is not normal. This looks like a few large institutions are playing the market and liquidating both long and short positions. There are also rumors circulating that many large funds went under on October 10 and are selling BTC to cover their losses,” he noted.
Additionally, another analyst pointed to Bitcoin's weekend price action as a sign of the latest manipulation. The post revealed that the cryptocurrency briefly dropped from around $89,700 to $87,700, triggering the liquidation of about $171 million in long positions.
In a matter of hours, the movement reversed sharply, and Bitcoin surged to around $91,200, wiping out an additional $75 million in short positions.
“This is yet another example of manipulation using the weak liquidity of the weekend to sweep away both leveraged long and short positions,” Bull Theory wrote.
Is Jane Street behind Bitcoin's morning dumps?
Interestingly, a market watcher also noted a clear trend: Bitcoin often experiences sharp declines around 10 AM after the US markets open. This pattern has been observable since early November and resembles activity seen earlier this year.
Consistency suggests a coordinated approach, not a random reaction. Bull Theory points to Jane Street, a large high-frequency trading firm, as a possible source. Jane Street is reportedly a major holder of BlackRock's $2.5 billion IBIT ETF fund, making it its fifth-largest position.
“When you look at the chart, the pattern is too consistent to ignore: a clear sweep within an hour of the market opening, followed by a slow recovery. This is classic high-frequency performance. This means that most of BTC's decline is not due to macroeconomic weakness but rather manipulation by a single large player,” the analysis revealed.
The suspected strategy is simple. High-frequency traders sell BTC when the markets open, pushing the price into liquidity pockets and then buy back at lower levels. They repeat this cycle, exploiting predictable volatility and accumulating billions in Bitcoin.
“Yes, it's called wash trading, and it's been illegal on exchanges since 1933. However, there are no laws for cryptocurrencies, so they can engage in it at will until the Market Structure Bill is passed. The problem with tracking Jane Street is that they don’t do it on-chain, but through ETFs. We cannot track their movements. Wintermute uses the blockchain with Binance, but Jane Street is completely opaque,” Marty Party stated.
Experts believe the impact may, however, be temporary. Once large players decide to enter the accumulation phase, Bitcoin could continue its upward movement supported by fundamentals.
