Crypto investment bull explains the cause of Bitcoin sell-off
The recent Bitcoin sell-off has been triggered by futures contracts expiring, according to Tom Lee.
Mr. Lee, who’s the Head of Research at Fundstrat Global Advisors, has assured investors that the Bitcoin sell-off is only short-term.
In a report released on Thursday, Lee states that the fall in values is a temporary correction, with prices to soon recover.
Lee, aka “the Bitcoin Bull,” blames the dip on “significant volatility” near futures expiry dates on the CME and CBOE futures marketplaces.
Citing digital assets investor, Justin Saslaw of Raptor Capital Management, Lee says there’s a pattern forming around futures.
He says a Bitcoin sell-off occurs when the related futures contracts are nearing their expiry dates.
Dramatic price changes
Speaking about the data compiled by his team, Lee states in his report:
“Bitcoin sees dramatic price changes around CBOE futures expirations…
“We compiled some of the data and this indeed seems to be true.”
Lee also explains in his reports that the flow of new capital into the market has been insufficient this year.
According to Lee, the inflow hasn’t been enough to make up for the extra supply coming from ICOs, mining rewards, plus outflow due to capital gains taxes.
In traditional stocks and financial markets, increased volatility in the market when futures contracts expire is a familiar phenomenon.
Since CBOE launched their Bitcoin futures, there have been six expirations.
The most recent expiry was on Wednesday, June 13th.
The Bitcoin sell-off has caused the cryptocurrency market to take a strong hit this past week.
Bitcoin is trading down from about $7,500 last Sunday to a low of $6,135.
Bitcoin saw a strong rebound on Thursday and is currently trading at around $6,560 at press time, according to the live price charts.