Investment

The data show that “falling bitcoin prices before CME expirations” is a myth


Historically, activity around bitcoin (BTC) Allegations of monthly futures and options have been blamed for weakening upward dynamics. Several studies from 2019 found an average decrease in the price of BTC by 2.3% 40 hours before CME futures settlement date.

However, as Cointelegraph stated in June 2020, the effect disappeared. While 2020 seems to have rejected the potential negative impact of CME’s expirations, the current year seems to confirm the theory. The price of bitcoins was suppressed before the expiration of futures and options in the first three months of 2021.

Bitcoin performance before and after CME, USD expiration. Source: TradingView

Some investors and traders have pointed out that the incredible bitcoin rally has become a trend after recent futures and options expiration dates.

The BTC effectively accumulated in the days following the expiry, but the dissemination of this analysis reveals a less than satisfactory trend.

Three consecutive events do not show a trend

For the past 13 months, there has been nothing spectacular for bitcoins, as the cryptocurrency has shown 788% gains. August 2020 proved to be the worst month, as BTC showed a negative performance of 7.5%. Thus, the selection of random starting points in a month is likely to show a similar positive trend.

For example, if someone uses the “moon phase” of the “last quarter” as a representative, the probability that a meeting will take place after each event is very high.

Bitcoin performance after the month of “Last Quarter”, USD. Source: TradingView

As shown above, bitcoins actually collected after five of the last six cases. The only conclusion may be that positive trends are the norm rather than the exception during bull runs.

Although there could be some explanation for the reason for the poor performance of bitcoin at the end of the month, these are only hypotheses.

While market makers and arbitrage counters could benefit from price suppression after the rally, other forces, including futures long leverage and call options holders, would offset this.

The price of bitcoin has not fallen in three of the last seven expiries

Therefore, it makes sense to analyze potential price suppression before expiration, instead of looking for an explanation for the bull market meeting.

Bitcoin performance before and after CME expires in 2020, USD. Source: TradingView

Exhibitors in October and December 2020 did not present any negative pressure before these dates. Meanwhile, the 12% positive performance in the five days preceding the last day of April 30 also raises a big question mark about how significant the CME event is.

Given that in three of the last seven cases there has been no fall in prices before monthly futures and expiration options, this evidence should put a nail in the coffin of an unsubstantiated myth.

As mentioned earlier, it is unlikely that it would attempt to develop theories as to why vendors acted more aggressively in specific data, results.

As mentioned above, the price of bitcoin did not perform worse in three of the last seven expirates. A success rate of 57% should not define the trend when a positive performance after a certain date has proven to be normal during a bull run.

The views and opinions expressed herein are those of an opinion author and does not necessarily reflect the views of the Cointelegraph. Every investment and business move involves risk. You should do your own research when making your decision.



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