View: Bitcoin Price Not Likely to Be Explicitly Suppressed by ETF Authorization Participating Institutions, But Price Discovery Mechanism Could Be Impacted

BlockBeats News, February 26th: The ongoing debate over the Bitcoin ETF mechanism triggered by Jane Street's market manipulation speculation. Bitwise advisor Jeff Park wrote that the question of whether the Bitcoin price was suppressed by Jane Street is not specific to a single institution but is determined by the structural features of the Bitcoin ETF architecture. Each Authorized Participant (AP), including Jane Street Capital, JPMorgan Chase, Goldman Sachs, etc., has the exemption to create and redeem ETF shares, allowing them to actively manage positions in the market, including using futures or derivatives for hedging, without needing to purchase physical Bitcoin. This may impact the price discovery mechanism. This gray area of operation arises from regulatory exemptions and SEC approval for physical delivery. Although there is no evidence that any AP explicitly suppressed the Bitcoin price, the existing structure may alter the natural price formation mechanism, warranting regulatory and investor attention.

Bloomberg ETF analyst Eric Balchunas responded, stating that this mechanism is indeed hard to understand, and he is curious about who or what force is behind the recurring "patterned selling" that appears daily and then vanishes suddenly. Samson Mow, CEO of Bitcoin tech company Jan3, stated that becoming an AP is not the sole factor in a suppression price strategy; the key is how "extensive" their undisclosed trades and hedging activities are, providing a channel to almost zero capital cost.