This is a followup article to http://genesisblocknews.com/paper-bitcoins-have-the-potential-to-ruin-the-bitcoin-market/ As I did the research for that story, I had a serendipity moment where I realized without any doubt that CME has caused the Bitcoin bear market of 2018. The launch of Bitcoin Futures on CME on 17 December 2017 coincided exactly with the end of the rally and the beginning of the crash. The opening price on CME was USD 20,650, and by the end of that same day Bitcoin was at USD 19,055. Just look at the long term chart, 17 December 2017 was the day where the Bitcoin market went from positive to negative.
The Bitcoin futures on CME are cash settled, meaning there is no Bitcoins involved in their trading or settling at all. Therefore, Bitcoin futures contracts on CME are paper Bitcoins. Each paper Bitcoin issued on CME diverts demand away from the Bitcoin spot market, lowering Bitcoin’s price, and also increases the total supply of Bitcoin beyond the actual Bitcoins in existence.
CME Bitcoin futures contracts are 5 Bitcoins each, and settled once a month. The volume of Bitcoin futures has been rapidly increasing, as Bitcoin dives lower and lower, and this is not a coincidence. The higher the volume of Bitcoin futures, the more paper Bitcoins that are printed.
In Q3 2018, on average 757,950 paper Bitcoins were traded per month. While the spot market volume is much higher than this, the printing and trading of this many paper Bitcoins per month has a massive impact on diluting the Bitcoin supply and diverting demand away from the spot markets. In the global financial markets Bitcoin is no longer as scarce, since anyone can deposit money at CME and print paper Bitcoins and trade them, even if every actual Bitcoin in the world was being HODLED.
If you do not believe me regarding the connection between the CME Bitcoin futures and the decline in Bitcoin’s price, the Federal Reserve issued a statement during May 2018 affirming that CME ruined Bitcoin’s price. Apparently the introduction of futures markets to other asset classes in the past has also caused a long term price decline. The Federal Reserve says that before Bitcoin futures launched optimists, i.e. Bitcoiners that actually cared about Bitcoin, were in control, and pessimists, i.e. the establishment that hates Bitcoin, had no mechanism to bet against Bitcoin’s price. Once Bitcoin futures launched, people that did not like Bitcoin could bet against its price as much as they wanted to via short selling.
Implicitly, the Federal Reserve is saying that if Bitcoin futures did not launch on CME, then Bitcoin would have rose well beyond USD 20,000. The launch of the CME Bitcoin futures was such a powerful action that it immediately halted the rally, as institutional investors began short selling mass amounts of Bitcoin, while diverting demand away from the spot markets and printing Bitcoins simultaneously.
CME is in control of COMEX, as mentioned in the previous article. COMEX acts to suppress and devalue the global price of gold at the expense of everyone else in the world who holds gold, by issuing 360 times more paper gold than the physical gold they have.
The CME Bitcoin futures are far more malicious than COMEX, since clients cannot have their Bitcoin delivered under any circumstances, unlike the gold futures which have a delivery option. Further, it seems COMEX at least keeps the gold price stable or slightly devaluing, while the Bitcoin futures on CME are going full steam ahead to crash Bitcoin’s price as far as possible.
The government is fearful of Bitcoin, as explained in an article I wrote a day ago, and the approval of paper Bitcoins on CME, and simultaneous rejection of financial instruments backed by actual Bitcoins, is proof that the government is launching a coordinated attack on Bitcoin. The government has basically given the green light for institutional investors to steal as much money as they want out of the Bitcoin market via the CME Bitcoin futures, since that serves the purpose of destroying the Bitcoin market, even if it is morally wrong and probably illegal. If Bitcoin overtakes the USD as the primary global currency, the government would lose most of its power, and therefore they will bend the law to prevent that.
GenesisBlockNews believes the Bitcoin community does not have to be docile about this. The Commodities Futures Trading Commission (CFTC) is required by law to protect investors, and in this case their approval of Bitcoin futures on CME is ruining the entire Bitcoin market and causing millions of Americans to lose tremendous amounts of money (not to forget many more people in the rest of the world). This is illegal, it could be proven in a court of law, and the Bitcoin futures in Chicago could be halted via a class action lawsuit combined with widespread protests.
Hopefully this article provides the knowledge people need to start fighting back. Bitcoin did not begin falling, and would have never crashed like this, if it was not for the launching of CME’s Bitcoin futures, which facilitates the mass theft of money from all Bitcoiners. It is time for Bitcoiners to get angry and aggressively protest CME.