Numerous theories emerge whenever the price of Bitcoin (BTC) takes a sudden and steep drop. The usual suspects include government regulations, the possibility of exchanges manipulating prices, Bitcoin whales manipulating prices, over-leveraged traders, and some conspiracies involving Tether (USDT).
SEC kicks Bitcoin ETF can down the road
Between Aug. 15 and Aug. 18, Bitcoin's price experienced a significant 12% decline. This occurrence followed a familiar pattern, prompting a variety of reasons put forth by analysts and experts.
Unfortunately, due to the decentralized nature of cryptocurrencies and the lack of transparency among exchanges, verifying whether a specific entity influenced the price movement remains a challenging task.
On Aug. 11, Ceni, a co-founder of Ceni Capital, made a prediction that turned out to be partially accurate. Ceni predicted a Bitcoin price lower than $29,000, anticipating the U.S. Securities and Exchange Commission (SEC) to postpone its decision regarding the Ark Bitcoin ETF.
SEC Delays Decision on Ark Invest’s Spot Bitcoin ETF Application, Calls For Public Input-8 week delay for BlackRock to manipulate the market. 29k should break soon cheap stats for holders and institutional investors. pic.twitter.com/pcBhOho0Ax
— CENI⬛️(,) (@ceni0718) August 11, 2023However, it's important to note that the prediction didn't specify the timing of this event or the exact support level. As a result, the statistical foundation of this hypothesis becomes less certain.
Nonetheless, Ceni has pointed to BlackRock as a potential instigator of Bitcoin's crash, a claim that warrants thorough investigation.
Spot-based Bitcoin ETF is not a short-term deal for BlackRock
The idea that BlackRock might benefit from a lower Bitcoin price before launching a spot-based Bitcoin ETF is not as straightforward as it may seem. While the concept of a lower Bitcoin price leading to increased profitability upon ETF launch might be intuitive, there are several reasons why this might not align with BlackRock's broader interests.
First and foremost, BlackRock has built a reputation as a respected financial institution based on its commitment to market stability and investor confidence. A sudden and substantial drop in Bitcoin's value could undermine the overall credibility of the cryptocurrency market, something BlackRock would aim to avoid. The priority of maintaining the market's legitimacy might outweigh any immediate gains resulting from a low Bitcoin price.
Secondly, obtaining regulatory approval plays a critical role in launching any financial product, especially within the cryptocurrency domain. The SEC meticulously assesses the potential for market manipulation and safeguards for investor protection. Engaging in activities that could be construed as price manipulation could jeopardize BlackRock's chances of securing the necessary regulatory approvals for their ETF offering.
Lastly, instilling investor confidence is of paramount importance when introducing any investment product, particularly a novel one like a Bitcoin ETF. A sharp Bitcoin price drop could erode trust among investors, not only in the asset class itself but also in the ETF.
Therefore, BlackRock's interest likely lies in launching the ETF during a period of positive sentiment, where investors feel confident about the potential for future gains.
If not BlackRock, who's to blame for the BTC price drop?
The next possibility often considered when trying to explain a drop in Bitcoin's price is the idea that the government will regulate the cryptocurrency sector. This could be driven by reasons like reducing demand to make the U.S. dollar stronger.
Usually, these theories suggest that steps would be taken to control stablecoins and exchanges that are located outside the U.S. Market analyst Joe Kerr talked about this on X:
Tinfoil hat time:
Sell Government Bitcoin to Coinbase to suppress price.
Get Binance to defend BNB by selling their Bitcoin.
Drain Binance’s cheap Bitcoin and sell it to coinbase.
Binance goes broke & Coinbase has the majority of exchange Bitcoin (SSA req achieved).
Approve…
— Joe Kerr⚡ (@Boomstick44) August 18, 2023While this theory is interesting, there are challenges and factors that make it seem less likely. First, it's possible to somewhat track government wallets, but we should remember that governments usually have only a small part of all the Bitcoin, so their influence on the whole market is limited.
Related: Bitcoin speculators are underwater on 88% of their BTC bags — Research
Betting against BNB price, and other nonsense
Next, the idea of betting against the price of BNB might not be as simple as it sounds. To bet against BNB, you'd need to borrow it, but you can't do that on platforms that follow regulations.
Moreover, by checking Binance's transparency page, you can see in real-time whether their Bitcoin wallets are getting smaller compared to other exchanges.
Bitcoin balance on exchanges (total), in BTC. Source: Glassnode/@jimmyvs24This could suggest unusual things like the wrong use of customer money or financial problems. Actual data from these observations is more important than just guessing, as it gives us insight into how well the exchange is doing.
Ultimately, most of these theories make assumptions and simplify things, ignoring how complex cryptocurrency markets, exchanges, and regulations are.
The real results could be very different from what's suggested, so while we might never know the truth for sure, we can at least dismiss such theories as BlackRock crashing Bitcoin before a spot-Bitcoin ETF approval.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
