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Bitcoin Futures Did Not ‘Manipulate’ BTC Price — Stock-to-Flow Creator

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Bitcoin futures do not unfairly impact the price of Bitcoin (BTC), according to the creator of one of the cryptocurrency’s most accurate price models.

In a series of tweets on April 7, PlanB, the pseudonymous analyst behind the stock-to-flow model, argued that futures have not caused the Bitcoin price to behave erratically.

PlanB: “Nothing unusual” in Bitcoin price after futures release

According to stock-to-flow, Bitcoin has performed as expected, even after the first futures hit the market in December 2017. 

Now an industry with hundreds of millions of dollars of volume daily, futures caused suspicion last year when some commentators noticed that settlement dates appeared to coincide with drops in BTC/USD.

“IMO #bitcoin price is NOT manipulated by futures,” PlanB retaliated. 

“CME launched BTC futures Dec 2017. Many point to Dec 2017 ATH as proof futures have suppressed prices. But BTC prices stayed perfectly within S2F bands. I would have expected this to happen with or without futures. Nothing unusual.”

Bitcoin stock-to-flow price chart as of April 7. Source: PlanB/ Twitter

Current price mirrors pre-$20K highs

Stock-to-flow charts Bitcoin’s past and future price based on the interaction between “new” Bitcoins released to miners and the existing Bitcoins in circulation. The model has proven to be extremely efficient, despite facing continued criticism from industry figures.

Last week, the Twitter user known as J0e007, a large volume trader on exchange Bitfinex, described those who champion stock-to-flow as “thousands of muppets.”

Continuing, PlanB suggested that even Bitcoin’s run to current all-time highs of $20,000 and the subsequent bear market was not made worse by futures.

“Oct 2017 was at current $7k level. The introduction of futures sparked hope of massive institutional inflow (“the herd is coming”), and BTC jumped almost 3x to $20k in Dec 2017,” part of another post reads. 

“The herd never came and prices bounced back to $7k and have been oscillating there 2.5 yrs.”





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3 things traders are saying about Bitcoin and the state of the bull market

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Bitcoin’s (BTC) dip below $29,000 on June 22 rocked the markets a handful of analysts to call for a potential drop below $20,000. 

Many traders on crypto Twitter were focused on the formation of a death cross on the Bitcoin chart as an omen for another potential drop in the price but analysts with a more contrarian point of view look at this chart pattern as a signal that it is time to buy the dip. 

Three reasons why some traders still see a bull case for Bitcoin include the appearance of the “spring” stage of the Wyckoff accumulation model, steady buying by long-term holders and the formation of a bear trap at the golden ratio that is similar to moves seen during previous bull runs.

The Wyckoff model says spring has arrived

The Wyckoff accumulation model has been all the rage amongst cryptocurrency analysts over the past month as the price action for Bitcoin has been tracking the pattern relatively closely since the May 19 sell-off.

As seen in the tweet above, Bitcoin’s plunge below $29,000 and the subsequent recovery above $32,000 has some analysts suggesting that the “spring test” seen in phase C of the Wyckoff pattern has been fulfilled. This would indicate that the bottom is in for the current correction and now begins the choppy climb higher.

If this turns out to be true, BTC would enter phase D, also known as the “markup phase” where a new uptrend is established and “pullbacks to new support offer buying opportunities” that are often seen as opportunities to buy the dip.

Related: Bitcoin drops below $36K as century-old financial model predicts big BTC crash

In phase D a breakout to new highs is expected as the cycle completes and prepares to potentially begin again once the move higher is exhausted.

Long term holders are still bullish

Another bullish sign cited by analysts is the steady accumulation by long-term holders.

The Bitcoin long-term net holder position shows that investors actually began to reaccumulate back in late April and they began to significantly increase their activity in May as the price fell into the $30,000 to $40,000. On-chain data shows that these investors have continued to buy into the most recent dip.

This activity suggests that more experienced crypto traders are familiar with Bitcoin’s market cycles and view the current range as a good level to open long positions when fear is high and the sentiment is low. 

The biggest rewards go to those who take the risk to buy an asset amid plunging prices and sentiment, and these are the types of situations where the contrarian traders thriv.

A bear trap lurks at the golden ratio

The third scenario some analysts are focusing on suggests that the current price movements have set up a bear trap that echoes a move seen during the last cycle which involves a pullback to the 1.618 golden ratio extension level which will then be followed by a breakout to new highs.

From this perspective, the market is currently in the awareness phase of the four psychological stages of asset bubbles. After the bear trap occurs, Bitcoin will enter the mania phase where widespread media coverage attracts the attention of new market participants who then chase the price to ever-increasing heights “based on the delusion that the asset will keep going up, forever.”

Previous calls for the possibility of Bitcoin reaching a price of $200,000 by the third or fourth quarter of 2021 by veteran trader Peter Brandt, who was far from alone in predicting its value to surpass the $100,000 mark this year, would suggest that the long-expected blow-off top is yet to come.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.