Among the weak spot seen in bitcoin over the previous week was probably brought on by futures contracts reaching their expiry date, based on Tom Lee, Head of Analysis at Fundstrat World Advisors.
In a report launched on Thursday, Lee blames the sell-off on “vital volatility” round futures expiry dates on the CBOE and CME futures marketplaces. He additionally cites an idea by Justin Saslaw, a crypto-asset investor at Raptor Capital Administration, that claims bitcoin appears to fall because the associated futures are nearing their expiry date.
“Bitcoin sees dramatic worth adjustments around CBOE futures expirations… We compiled among the knowledge and this certainly appears to be true,” Lee wrote within the report.
Moreover, Lee defined that the influx of recent capital to the crypto market this yr has been inadequate to make up for the brand new provide coming from preliminary coin choices (ICOs), mining rewards, and outflows as a result of capital beneficial properties taxes.
Elevated volatility within the underlying markets when futures contracts expire is a well-known phenomenon from shares and different conventional monetary markets. There have been six expirations since CBOE launched their bitcoin futures, with the newest expiry being on Wednesday, June 13.
Bitcoin has taken a robust hit this previous week, buying and selling down from about USD 6,720 on Friday, June 22nd to a low of USD 5,867.