Cryptocurrency investors have accused quantitative trading firm Jane Street of putting pressure on Bitcoin’s price with a daily, programmatic selloff at the U.S. market open, but market analysts and data suggest the pattern is inconsistent and no single company can force Bitcoin into a prolonged bear market.
Reports surged online a day after the court-appointed administrator of Terraform Labs sued Jane Street, alleging insider trading in connection with transactions that worsened the collapse of Terra’s algorithmic stablecoin ecosystem in May 2022.
Several market watchers, including cryptocurrency influencer Justin Bechler, have argued that Jane Street’s ownership of BlackRock’s iShares Bitcoin Trust (ETF), known as IBIT, may be masking a net compact position in Bitcoin through hedging that does not appear in public filings. Bechler argued that Jane Street conducted coordinated, algorithmic Bitcoin sales every day at 10 a.m. Eastern Standard Time, manipulating the price of Bitcoin (BTC) in order to purchase the ETF at a discount.
“When Jane Street reports owning $790 million worth of IBIT stock, the filing says nothing about whether those shares are hedged by put options, offset by short futures contracts, or wrapped in a collar that makes the company’s net exposure to Bitcoin zero or even negative.” he wrote Bechler, adding that “the actual position may be a huge short position that looks long because the offsetting half of the trade is invisible under applicable disclosure laws.”
CryptoQuant’s head of research, Julio Moreno, warned that the activity described by Bechler is not specific to one company. He said buying spot exposure when selling futures is a common approach for delta-neutral funds that want to capture spreads rather than directional price movements.
Jane Street’s latest 13-F filing also revealed a stake in Strategy, as well as significant positions in bitcoin mining companies Bitfarms, Cipher Mining and Hut 8.
The claims center on the 10:00 a.m. Bitcoin airdrop
The online narrative centers on the idea that Bitcoin’s price regularly declines shortly after 10 a.m. Eastern Standard Time, a window that coincides with the start of U.S. trading. Onchain Analyst Nonzee sent on Wednesday, he published an hourly chart of Bitcoin and claimed that Jane Street had been “manipulating” the market for months at the time.
Whale Factor cryptocurrency market observer account he claimed Bitcoin has consistently seen a 2% to 3% daily decline in the minutes after opening in the US, with claims that programmatic manipulation has been underway since early November.
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“Many traders point to Jane Street’s massive position of over $2.5 billion in BlackRock’s IBIT as a likely driver: engineered liquidity shifts to accumulate spot ETFs at a discount,” Whale Factor said in a December 9 X post.
Macro analyst Alex Krüger disputed this formulation while sharing blockchain data, pointing out that Bitcoin saw cumulative returns of 0.9% between 10:00 and 10:30 a.m. since January 1, arguing that it was not a “system dump.”
“Everyone says Bitcoin dumps every day at 10:00. I pulled the data and it’s not true.” he wrote Krüger in a Thursday post on X, adding that the “10 a.m. drop” theory is a broad sell-off in risk assets that tracks the price performance of the Nasdaq stock index.
Analysts say that one company cannot cause a bear market
Even if certain trading strategies boost volatility around the U.S. open, some market participants said it was unlikely that any one entity could dominate a global market as deep and fragmented as Bitcoin.
“Regardless of whether market manipulation has occurred, Bitcoin’s price is not driven by just one company, no matter how influential it is. This is not memecoin,” said Nick Puckrin, co-founder and chief market analyst at education platform Coin Bureau.
“It’s understandable that investors who feel strongly about Bitcoin look for a villain during a major downturn. However, the reality of Bitcoin market dynamics is much more nuanced.”
Puckrin said Bitcoin’s recent weakness could be better explained by a combination of geopolitical uncertainty, global liquidity conditions and competition for investor attention from the rapidly growing artificial intelligence sector.
Warehouse: The “biggest catalyst for a Bitcoin bull run” would be the liquidation of Saylor, the founder of Santiment
