With only one day left until the US election, the election situation remains tense and the outcome is still unpredictable. Bitcoin’s “Trump trade” some time ago has also begun to cool down, with Bitcoin even falling below $68,000, and altcoins are making matters worse.
StarEx exchange analysts believe that Bitcoin is supported entirely by the inflow of funds from ETFs, while altcoins and even Ethereum remain weak due to the continuous outflow of funds, and this state may continue for a long time. In addition, regardless of the outcome of the US election, the upward trend of Bitcoin will not be affected.
The core reason is that Wall Street financial institutions have taken control of Bitcoin. On January 10, 2024, the Bitcoin ETF was approved, allowing Wall Street institutions to legally buy Bitcoin through traditional financial channels. This policy shift not only rapidly expanded Bitcoin's influence in the traditional financial field, but also made its price fluctuations more closely related to Wall Street's capital flows. Since the ETF was approved, Wall Street institutions have held nearly 1 million Bitcoins, worth about $70 billion.
Judging from the market trends over the past year, the net buying and selling of ETFs directly affects the price trend of Bitcoin. When Wall Street institutions make net purchases, the price of Bitcoin usually rises; conversely, when institutions make net sales, the price of Bitcoin falls. This phenomenon shows that Wall Street financial institutions have almost taken control of the pricing power of Bitcoin. In the current market, Wall Street can dominate the price fluctuations of Bitcoin simply through buying and selling operations.
According to the latest data, the world's largest asset management company BlackRock has held more than 410,000 bitcoins, Grayscale Fund holds more than 250,000, and Fidelity Group holds less than 200,000. Other institutions hold fewer. BlackRock's influence on the Bitcoin market is particularly significant, and it is often the absolute main force of net inflows in the market, with net inflows often accounting for more than 80% of the total. The scale of holdings and frequent transactions of large financial institutions such as BlackRock make the price changes in the Bitcoin market more dependent on the capital flow of these institutions rather than the buying and selling behavior of retail investors.
StarEx exchange analysts believe that the dominance of institutions in the Bitcoin market not only affects price fluctuations, but also makes market manipulation possible. Since Wall Street institutions such as BlackRock hold huge positions and can regulate market liquidity, it is easy for them to manipulate prices.
Behind the manipulation of the spot market is the shift of the core battlefield to derivatives. The open interest of Bitcoin contracts has exceeded 40 billion US dollars, which forces institutions to control the Bitcoin spot market in order to effectively control the derivatives market. Institutions must "harvest" to make money. The control of Bitcoin pricing power determines the certainty of Bitcoin derivatives harvesting.
From historical experience, after the US election or interest rate cut, the market tends to surge, then gradually decline, or even a big bear market. The global economy is currently facing many challenges, including potential risks such as economic recession and debt crisis. This provides the Federal Reserve with a reason to continue to print money to save the market, which has been done in the past few decades. With the expectation of a large depreciation of paper currency, a long-term bull market for Bitcoin is certain.
StarEx exchange analysts believe that with the intervention of Wall Street, Bitcoin has gradually developed from a decentralized digital currency to an asset controlled by a few financial giants. Its divergence from other cryptocurrencies also shows that it has broken away from the traditional cryptocurrency and truly become "digital gold." Financial institutions on Wall Street have taken a dominant position in the Bitcoin market through large-scale holdings and frequent transactions, and are able to manipulate prices in the market. In the future, the market ecology of Bitcoin may be more centralized.
