Opinion: Bitcoin prices will not be clearly suppressed by ETF authorized participating institutions, but the price discovery mechanism may be affected

Comparing news, discussions on the Bitcoin ETF mechanism triggered by Jane Street market manipulation speculations continue to ferment. Bitwise consultant Jeff Park wrote about this, stating that the question of whether Bitcoin prices are suppressed by Jane Street is not directed at a single institution, but is determined by the structural characteristics of the Bitcoin ETF architecture. Every authorized participant (AP), including Jane Street Capital, J.P. Morgan Chase, Goldman Sachs, etc., has immunity to create and redeem ETF shares, which allows them to operate positions flexibly in the market, including hedging with futures or derivatives without having to buy spot Bitcoin, which may affect the price discovery mechanism. This grey operating space stems from regulatory exemptions and SEC approval of physical delivery. Although there is no evidence that any AP clearly suppresses the price of Bitcoin, the existing structure may alter the natural mechanism of price formation and is worthy of regulation and investor attention.

Bloomberg ETF analyst Eric Balchunas responded that this mechanism is really difficult to understand, and I'm curious who or what forces are behind the pattern sell-offs that appear every day and then suddenly disappear. Samson Mow, CEO of Bitcoin technology company Jan3, said that being an AP is not the only factor in suppressing the price strategy; the key is how extensive their undisclosed trading and hedging activities are. This is a channel that brings the cost of capital close to zero.