Tom Lee attributes recent Bitcoin slump to Bitcoin futures

16 Jun, 2018
by Matthew Kim
Tom Lee attributes recent Bitcoin slump to Bitcoin futures

Thomas Lee, the head of research at Fundstrat Global Advisors, says that part of the reason for Bitcoin’s drop this week is the expiration of Bitcoin futures.

According to Bloomberg, Lee wrote that Bitcoin fell an average of 18 percent over the course of 10 days preceding the expiration of the futures contracts, and the price only began to recover on the sixth day after the expiration. Large Bitcoin holders who are short on the futures could sell large amounts of the coins at volume weighted average price (VWAP) to minimize tracking error. Then, near the expiration, the holders would sell the remaining coins and cause a price drop, allowing them to take large profits on the shorts.

Simultaneously, new inflows into crypto have been lacking. Not only has the absorption to crypto been reduced by the decelerated progress of creating institutional tools for crypto, but also there is more net supply on the year due to initial coin offerings, mining rewards, and capital gains taxes.

At the time of writing, Bitcoin stands at around $6,500, 68 percent lower than its all-time-high. It has dropped 23 percent in the last 30 days, 16 percent in the last week, and 3 percent in the last 24 hours.

Read more about: Bitcoin (BTC)


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