How btc price could be manipulated by future settlement (CFDs)
Hi Chris,
I like your podcast a lot and am currently listening to this episode. Since you mentioned you didn’t quite get your head around the above mentioned topic yet, here is what I recon:
They buy/bought a btc-future that will settle at or about at the market level of btc at which they buy. They buy when btc is/was at a high price (say 19,000 USD/ settle also 19,000). At the same time the buy a lot of btc at that same price. Then they wait. When the end of the future nears they throw all their btc at the market in order to put pressure on the price. Even better at an opportunity when FUD Drive the price down already. The may loose some money on the btc they bought (but only a little since they still sell at say 15-16,000 USD). By driving the market down, nervous retail investors may/will follow. Stop-orders will follow. The price goes down and down to let’s say 9,200/10,250. If they timed it right, that is when the futures settle - and they get the differnce of the market price to the promised price (9,500 vs 19,000 USD- so they make about 9,800 USD for each CFD). Profit is 9,800. - maybe 3,500 ( which thy lost in selling the btc they bought for flooding the market) = 6,500 USD per CFD ...