Market Makers Bet Big On Bitcoin Price Surge: Expert
November 08 2023 - 2:15AM
NEWSBTC
In a series of insightful observations, Adam Cochran, a renowned
expert in the field of cryptocurrency and founder of Cinneamhain
Ventures, recently shared his analysis on the relationship between
Bitcoin price movements and US Treasury auctions. Cochran’s
comments, primarily disseminated viaX (formerly known as Twitter),
offer a unique perspective on an emerging trend in the market,
particularly in relation to traditional financial instruments.
Bitcoin Price Rises After Each Treasury Auction Cochran notes a
distinct pattern: “Some big market maker seems to really care about
real rates vs Bitcoin (I guess in anticipation of ETF buyers?).
Every time you get a good auction on US treasuries, you’ve got
about 5 min before BTC takes a leg up.” This observation suggests a
correlation between the outcomes of USTreasury auctions and
subsequent movements in Bitcoin prices. The essence of Cochran’s
theory revolves around the concept of real interest rates and their
inverse relationship with Bitcoin. Real rates refer to the interest
rates adjusted for inflation. In traditional finance, these rates
significantly influence investment decisions across various asset
classes. Related Reading: Bitcoin Price Targets $46,000 As DXY
Receives Kiss Of Death Cochran posits that a successful US Treasury
auction, which typically indicates lower yields (and hence lower
real rates), is quickly followed by a spike in Bitcoin prices. This
trend, according to Cochran, is indicative of a market maker
betting on large funds allocating to Bitcoin as a hedge against
real rates. This relationship becomes particularly significant in
light of discussions around Bitcoin Exchange-Traded Funds (ETFs).
According to Bloomberg experts, there is a 90% chance of a spot
Bitcoin ETF receiving approval by the end of the year. One of the
reasons for this is that the US Securities and Exchange Commission
(SEC) has been actively communicating with applicants such as
BlackRock and Fidelity in recent weeks, as a result of which
amendments to the application have been submitted. The increasing
seriousness of these conversations seems to have amplified the
correlation, as noted by Cochran: “Someone is making the bet that
large funds will allocate to Bitcoin as a counter to real rates
which would be huge.” Related Reading: Altcoins Market Share Versus
Bitcoin At A 4 Month High: What’s The Trigger? Furthermore, Cochran
highlights the impact of Bitcoin’s price movements on the broader
financial market: “The BTC momentum on any upswing is pretty clear,
it’ll suck a lot of momentum out of other parts of the market,
because its current catalysts are just on another scale.” Backtest
For The Theory Still Pending In response to an inquiry about
backtesting this theory, Cochran admitted the lack of long-term
data but emphasized the recent nature of this trend: “Hrm, someone
probably has that data? I’ve just been monitoring manually, and the
correlation has only been the past few weeks to month, since the
ETF convo got serious, so a long dated backtest wouldn’t hold.”
This acknowledgment points to the nascent stage of this observed
correlation. Nevertheless, Cochran’s insights offer a compelling
narrative linking traditional financial markets with Bitcoin. As
the conversation around Bitcoin ETFs gains momentum, these
observations could become increasingly relevant, offering valuable
insights for investors. At press time, Bitcoin traded at $35,278.
Featured image from Shutterstock, chart from TradingView.com
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