3 reasons your argument is lacking

Conspiracy theories and scam rumors are widespread in the cryptocurrency industry, but basic market knowledge is sometimes lacking among retail traders who get most of their information from social media.

Recently, some prominent cryptocurrency market analysts have identified so-called “Binance manipulators” who have been extremely active in Bitcoin (BTC) futures trading. This entity is believed to be one of the main reasons why Bitcoin was rejected at $66,000 and retested the $63,500 support level today.

While there is undeniable evidence that large-scale offers and transactions existed, a number of unsubstantiated and flawed assumptions contribute to the belief that this entity was attempting to effectively suppress the price of Bitcoin.

Even assuming the same entity made multiple large offers on the Bitcoin futures order book, we wouldn’t know if they were purchasing using different accounts.

Arbitrage and hedging account for large Bitcoin futures orders.

It is very common for large trading desks to have separate investment vehicles for arbitrage and long-term holding, this is neither illegal nor unusual for traditional asset managers and hedge funds.

Therefore, large-scale, overt offers, known as spoofing, can be used to create fear, uncertainty and doubt, while at the same time covertly purchasing those contracts. Essentially, it appears that the investor is a large seller, but in reality, this entity is a net buyer of derivatives contracts. This theory is supported by the increase in open interest on Binance.

Another source of conflicting data comes from the purchasing side. This is because order book analysts observed firms adding more than 4,000 BTC bids for Bitcoin futures after the $64,500 support level was breached.

So this data shows that even though large, seemingly similar-sized companies are fighting for manipulation, S&P 500 futures are showing a correction and the news flow is on the bearish side. Major economic publications highlighted stagnant global growth and tensions in the Middle East.

TWAP Strategy Contradicts the Intentions of “Binance Manipulators”

The crux of the “Binance manipulator” theory comes from another post by ChimpZoo. The post alleges that the same company abandoned large offerings and instead proceeded to sell Bitcoin futures by executing market orders at specified time intervals.

Time Weighted Average Price (TWAP) is a preferred strategy by institutional traders, including arbitrage desks and market makers. Traders aim to minimize the price impact by spreading out large orders into small clips that are executed regularly. This is the opposite of manipulation. So, if the company’s main goal is to lower the price of Bitcoin, it doesn’t make sense.

For example, arbitrage seeks to capture inconsistencies across markets, such as between different exchanges or products. If a company has been offered a large amount of over-the-counter (OTC) spot BTC or exchange-traded funds (ETFs) at a discount, it would make sense to make a large offering in Bitcoin futures contracts as a hedging strategy.

relevant: 3 Signs Bitcoin Price Is Not Ready to Hit All-Time Highs

The arbitrage desk’s job is to balance risk using the derivatives market, ultimately selling spot market positions and buying back short (bearish) positions on BTC futures. A similar example can be found in the options market, where market makers can test the market by placing large sell orders on futures before closing trades that could result in higher price exposure.

Ultimately, we may never find out the true intentions behind these companies, and whether the same groups were behind buy and sell barriers or were simply using futures as a hedge against other financial instruments. Although the “Binance manipulator” theory cannot be completely dismissed, all available data indicates fair play and normal market activity.