How Exchange Traded Funds Can Manipulate Bitcoin Price

Mark Yusko, hedge fund expert, co-founder and CEO of Morgan Creek Capital provided his commentary on the complex methods by which exchange-traded funds (ETFs) can affect Bitcoin (BTC) prices.

Yusko's analysis emphasizes the strategic manipulation of Bitcoin – a tactic reminiscent of Wall Street's traditional strategy of driving down prices to buy assets cheaply. He explained how entities can drive down BTC prices through negative sentiment or direct market action, allowing them to accumulate more at lower prices.

According to him, this method is not only widespread but has been perfected over decades in traditional markets.

"Prices drop 10% overnight because there is a bunch of manipulation in the futures market… If you want to buy a lot of something, what do you do? You are selling. You tell everyone how bad it is, you initiate short positions, you push the price down so you can buy more at a lower price”, Yusko explained.

He noted another particular pattern where significant Bitcoin price movements occur outside of regular trading hours.

Yusko attributed this anomaly to the strategic actions of large institutional players who manipulate the closing price of the Bitcoin ETF, thereby influencing the asset's overnight valuation. This manipulation allows the entities in question to profit from the price differences they have created.

The strategy in question uses the futures market, where traders can speculate on the future price of Bitcoin without actually owning the asset. BTC futures contracts affect its current value through speculation, not through physical exchange.

The separation from physical assets allows for market manipulation through speculative trading, which distorts the true dynamics of supply and demand for the asset.