Bitcoin has lost nearly 30 percent in the last weeks and more than 50 percent this year. But Tom Lee of Fundstrat now feels to have uncovered the reason behind it and said that since the launch of Cboe bitcoin futures in December, prices have plunged leading up to expiration.
“Bitcoin sees dramatic price changes around CBOE futures expirations. This was something flagged by Justin Saslaw at Raptor Group. We compiled some of the data and this indeed seems to be true, (…) Overall, bitcoin has fallen 18 percent in the 10 days prior to CBOE contract expiration.”
while he added two exceptions in February when prices ran up nearly 15 percent into expiration and in April when prices went up 16 percent.
“A broader observation is there is significant volatility around these expirations,” so Lee. “And on average, the price recovered by day six [following expiration].”
Of course have there also been other reasons for that kind of a bloodbath, such as regulatory uncertainty, concerns over price manipulation and bear market sentiment that have all weighed on the cryptocurrency.
None the less, if Lee’s theory holds true the prices could recover in the next few days, while Cboe bitcoin futures have fallen nearly 70 percent from their December high of $20,500. Lee is also still standing by his 2018 year-end bitcoin price target of $25,000.