Trump Administration Popped 2017 Bitcoin Bubble, Ex-CFTC Chair Says. By Brady Dale.
Christopher Giancarlo, who left the U.S. Commodity Futures Trading Commission (CFTC) at the end of his five-year term as chairman in April, told CoinDesk in an interview:
“One of the untold stories of the past few years is that the CFTC, the Treasury, the SEC and the [National Economic Council] director at the time, Gary Cohn, believed that the launch of bitcoin futures would have the impact of popping the bitcoin bubble. And it worked.”
In a speech at the Pantera Summit in San Francisco on Monday, Giancarlo elaborated further, saying bitcoin’s dramatic price run-up in December 2017 was the first major bubble following the 2008 financial crisis. That’s why the Trump administration acted in concert to address it in a pro-markets manner, he said.
Bitcoin futures listed by the Chicago Mercantile Exchange (CME) and the CBOE Futures Exchange (CFE) were announced by the CFTC on Dec. 1, 2017 and went live on Dec. 18. Bitcoin’s price peaked at nearly $20,000 one day earlier, on Dec. 17, before falling dramatically in subsequent weeks.
There are no markets anymore, just manipulations.
However, it’s rare to get an almost-official admission.
As we pointed out on 8 Dec 2017, a week before the futures opened:
A futures exchange in New York will start to trade Bitcoin starting Monday. For the first time, people will be able to bet on Bitcoin, both up and down (long and short), using US dollars. That is, you can bet on the price of Bitcoin to go up, or to go down, without ever having to own any.
This is important because the introduction of futures markets has previously coincided with the end of upward movement in several commodities, such as uranium in 2007. Many say that futures markets are used to control the price of gold, which is politically sensitive and widely regarded as a barometer of health for government currencies. The way it works is that the futures contracts are effectively an artificial supply of the underlying commodity, thereby changing the supply and demand balance. There is far more “paper gold” (contracts entitling a holder to gold) than real gold in the financial world.
Futures markets also allow a determined and well heeled player to push the price around by simply buying long or short sufficient to move the market. Thus, any price with a futures contract on it can be pushed around if one is prepared to burn some cash. Central banks have infinite cash (they can always make more), and are very sensitive about competing financial products. If done judiciously, taking advantage of people’s stops and psychology, one can even make a profit by pushing the market around — it needn’t cost much at all.
Read it all for the method the well-connected probably used to make a killing on Bitcoin — perhaps on the way up, and almost certainly on the way down.
More: Bitcoin bottomed out above $3,000, around the time an announcement was made futures trading would cease. Who would have thought?