Bitcoin (BTC) continues its volatile path today, dropping by 0.70% over the past 24 hours. The decline in assets has raised concerns among traders.
Some analysts argue that Bitcoin's performance is a result of potential price manipulation, pointing to a recurring pattern of declines around the opening of the U.S. market, as well as institutional participation.
Insider manipulation vs. market dynamics: Decoding the Bitcoin decline
Bitcoin defied all bullish expectations in the fourth quarter, a period that has traditionally been strong for the asset. While the market crash on October 10 was a key factor behind Bitcoin's decline at the start of the quarter, market watchers began to question the sustainability of this weakness.
Traders' frustration is growing over Bitcoin's lack of response to market developments. For example, Strategy (formerly MicroStrategy) announced yesterday that it acquired 10,624 Bitcoin for $962.7 million.
Despite this bullish news, Bitcoin is in the red today, down 0.70% and trading at $90,487.
On the other hand, negative developments also lead to the same selling pattern. Analyst Ash Crypto pointed out that the market continues to act irrationally and does not respond to positive developments as expected.
In a separate post, Ash suggested that Bitcoin's crash from $126,000 to $80,000 cannot be considered a normal market correction. He pointed out that since the market collapse and historical liquidation in October:
US stocks rose by 8%, with many stocks hitting all-time highs.
However, Bitcoin is still down 29% from its pre-crash level, and any short-term rises are met with intense selling.
$500 million in liquidations happen roughly every two days, indicating ongoing forced selling.
He said, "If it were just a leverage issue, it should have been short-lived and the market should have bounced back quickly, but instead we continued to sell without any significant rebound. This is not normal. It seems that some large institutions are playing in the market and liquidating both buys and sells. There’s another rumor in town that many large funds collapsed on October 10 and they are selling BTC to cover their losses," he added.
Another analyst pointed to Bitcoin's price movement over the weekend as evidence of the latest manipulation. The report revealed that the cryptocurrency briefly dropped from around $89,700 to $87,700, resulting in the liquidation of approximately $171 million from long buys.
Within hours, the move reversed sharply, driving Bitcoin up to around $91,200, wiping out an additional $75 million from short buys.
Bull Theory wrote that "this is another example of manipulation in a low-liquidity weekend to wipe out both short and long buys."
Is Jane Street behind the morning Bitcoin decline?
Market observers have also noted a clear trend: Bitcoin often experiences sharp declines around 10 AM, after the US market opens. This pattern has been visible since early November and reflects similar activity observed earlier in the year.
Continuity suggests a coordinated approach rather than a random response. Bull Theory points to Jane Street, a major high-frequency trading firm, as a potential source. Jane Street holds what is said to be $2.5 billion in BlackRock's IBIT ETF, making it its fifth largest position.
Analysis revealed that "looking at the chart, the pattern is consistent enough to be unmissable: a clean wipe within an hour of the market opening followed by a slow recovery. This is classic high-frequency execution. This means that most of the drop in BTC is not due to overall weakness but due to manipulation by one major entity."
The strategy is suspected to be simple. High-frequency traders sell Bitcoin at market open, pushing the price towards liquidity pockets, then buy back at lower levels. They repeat this cycle, profiting from expected volatility and accumulating billions in Bitcoin.
Marty Party stated that "yes, this is what is called wash trading, which has been illegal in the stock market since 1933. There are no laws on crypto, so they can wash trade as they please until a market structure bill is passed. The problem with tracking Jane Street is that they don’t do it on-chain; they do it through ETFs. We cannot track their moves. Wintermute uses the chain with Binance but Jane Street is completely opaque."
Analysts, however, believe the impact may be temporary. Once the major operators complete their accumulation phase, Bitcoin could resume its upward trajectory driven by fundamentals.
