Altcoin News: Futures Remain a Reliable Tool for Predicting the Behavior of Bitcoin
Bitcoin won back a significant portion of recent losses at the beginning of the week, rising by 13% over the course of several days. According to analysts, the growth occurred after the monthly closure of Bitcoin futures on the Chicago Mercantile Exchange (CME).
September 2, when Labor Day was celebrated in the United States, US markets were traditionally closed, including CME. The cryptocurrency market, whose work is not dependent on national holidays and other circumstances, began to grow, refusing to follow the usual pattern of decline on Monday.
Similar gaps form when the underlying asset experiences a sharp change in the exchange rate while the derivatives market is closed. Subsequently, the market opens below or above the closing level of the previous session.
Kruger notes that this is quite common for CME Bitcoin futures. In June, he collected statistics showing that since the beginning of the year, over the weekend, the deviation of the Bitcoin exchange rate from the price of CME futures by more than 3% has occurred in 40% of cases, and mainly in the bullish direction.
“Traders manipulate. Not the CME,” writes Kruger. “An exchange closing while the rest of the market is open exposes traders in the closed exchange.”
This phenomenon became so stable that market participants began to pin certain expectations on the change in the Bitcoin exchange rate on key days for CME futures. It is also noteworthy that subsequently, gaps in the futures market tend to close, which traders try to use when predicting the behavior of the underlying asset.
Sharp market movements are noted not only after the close of futures but also in front of it. Just last week, Bitcoin experienced a rapid collapse from $10,200 to $9,500. Although Bitcoin is volatile, this is not the only case of its manifestation immediately before the closure of futures. History evidence that the price of Bitcoin on average fell by 8% during the week preceding the closure of CME futures.
Earlier, the former chairman of the U.S. Commodity Futures Trading Commission (CFTC) Christopher Giancarlo stated that the approval of Bitcoin futures was a justified decision since they allowed betting against the price of the cryptocurrency in a regulated market and helped to bring its price down from a historic maximum.
Author: Marko Vidrih