Analyst Blames Wall Street for Bitcoin Crash, Warns of FOMC Risk

Crypto analyst Bull Theory has identified a consistent and disruptive pattern in Bitcoin trading, squarely blaming Wall Street trading desks for recent price crashes. In a detailed analysis, Bull Theory points to the U.S. market open at 10 a.m. Eastern Time as the trigger point, noting that BTC has repeatedly erased 16 hours of gains in just 20 minutes following this event. This phenomenon, the analyst claims, has been notably occurring since early November, when Bitcoin fell below the $100,000 threshold, with similar actions playing out in the second and third quarters of this year.

The analyst’s investigation, referencing claims from another analyst known as Zerohedge, singles out Jane Street as the likely entity behind this activity. Bull Theory describes the chart pattern as “too consistent to ignore,” characterized by a clean price wipeout within the first hour of the market opening, followed by a slow recovery throughout the day. This behavior, the analyst argues, is “classic high-frequency execution” that fits the profile of Jane Street, one of the world’s largest high-frequency trading firms.

According to the accusation, the firm’s strategy is straightforward: dump a significant amount of BTC at the market open to push the price down into liquidity pockets, then re-enter the market at a lower price to accumulate more Bitcoin. Bull Theory claims this manipulative tactic has allowed Jane Street to accumulate billions in BTC. Substantiating the firm’s substantial interest in the asset, it is reported to hold a $2.5 billion position in BlackRock’s Bitcoin ETF (IBIT), making it the fund’s fifth-largest holder. This evidence leads Bull Theory to conclude that the recent price dumps are not a reflection of macroeconomic weakness but rather targeted manipulation by a powerful market participant.

Compounding the alleged manipulation from trading desks, Bitcoin now faces a significant macroeconomic event. Crypto analyst Ali Martinez has issued a warning that the flagship cryptocurrency is at risk of a substantial decline following the Federal Open Market Committee (FOMC) meeting. Martinez’s analysis is grounded in a stark historical pattern: Bitcoin has reacted negatively to FOMC meetings for six out of the seven instances this year, each time leading to a correction.

This warning comes despite a strong rally that saw Bitcoin’s price surge to nearly $94,500 in anticipation of the Fed’s potential decision. Market data from CME FedWatch indicates a 90% probability that the Federal Reserve will announce a 25-basis-point rate cut. However, a report from CryptoQuant highlights a concerning trend: the previous two rate cuts by the Fed this year turned into ‘sell the news’ events for Bitcoin, where the price fell after the anticipated announcement. The report suggests a high probability of this pattern repeating, adding downward pressure on BTC.

At the time of writing, Bitcoin’s price was trading around $92,600, reflecting a decline over the previous 24 hours. This sets a tense backdrop for the FOMC announcement, as the market grapples with the dual pressures of alleged institutional manipulation and a historically bearish reaction to Fed policy signals.

The confluence of these two analyses paints a complex picture for Bitcoin’s near-term trajectory. On one hand, Bull Theory suggests the current price weakness is artificially engineered. The analyst expects that once large players like Jane Street have completed their accumulation phases, Bitcoin’s underlying upward momentum will reassert itself, implying that the asset’s fundamental bullish thesis remains intact despite the short-term turbulence.

On the other hand, the specter of the FOMC meeting introduces a layer of genuine macroeconomic risk that cannot be ignored. The consistent negative price reaction to these meetings in 2024 presents a credible, data-backed threat of further decline, independent of any trading desk activity. This creates a scenario where Bitcoin is caught between targeted selling pressure at the market open and potential broad-based selling following a major policy announcement.

For investors, the current environment underscores the heightened influence of institutional actors and traditional financial events on the cryptocurrency market. The allegations against Jane Street, if accurate, reveal how high-frequency trading strategies with significant capital can create predictable volatility. Simultaneously, the FOMC pattern demonstrates that Bitcoin, despite its decentralized origins, remains acutely sensitive to the monetary policy decisions of the U.S. Federal Reserve, navigating a landscape where manipulation and macro forces are increasingly intertwined.