ICE debut likely tanked Bitcoin, says JPMorgan

Bloomberg

Bitcoin’s 20 percent drop was likely fuelled by the effect of Intercontinental Exchange Inc’s (ICE) new futures contracts and an unwinding of long positions, according to JPMorgan Chase & Co.
The cryptocurrency’s plunge, its biggest in a week since last November, took it from around $10,000 to a close of $8,061.
Though the strategists led by Nikolaos Panigirtzoglou were quick to point out that the introduction of physically delivered futures was a further step to maturity for the market, they said it probably depressed prices.
“It may be that the listing of physically settled futures contracts (that enables some holders of physical Bitcoin e.g. miners to hedge exposures) has contributed to recent price declines, rather than the low initial volumes,” JPMorgan said in the report.
Numerous crypto-market watchers have cited lower-than-expected volumes for the ICE futures contract as a likely contributor to this week’s drop. Other suggestions included concern about difficulty getting US approval for Bitcoin-related exchange-traded funds, and pressure around technical levels.
Panigirtzoglou and colleagues noted that they have in the past seen Bitcoin price peaks coinciding with overbought conditions. Using proxies to analyse positioning by futures traders, they said the long base in CME contracts appears to have declined “markedly” from its peak a couple of months ago with some further reduction. The Bitmex position proxy suggests a “more marked capitulation” of Bitcoin longs over the past week, they said.
“This position liquidation has also likely contributed to the sharp falls in Bitcoin prices this week,” strategists said, adding a note of caution: “While the previous overhang of long Bitcoin futures positions appears to have cleared in Bitmex futures, this is not yet true for CME contracts.”