Christopher Giancarlo, former U.S. Commodities and Future Trade Commission (CFTC) Chairman has claimed that the Trump Administration was responsible for popping the Bitcoin Bubble of 2017.
Introducing Bitcoin Futures
Talking at the Pantera Summit in San Francisco on 21stOctober, the Ex CFTC Chairman said that the proactive move was made to protect markets and deflate that artificial rise of Bitcoin price,
One of the untold stories of the past few years is that the CFTC, the Treasury, the SEC and the [National Economic Council] director at the time, Gary Cohn, believed that the launch of bitcoin futures would have the impact of popping the bitcoin bubble. And it worked.
Bitcoin futures were launched on 1stDecember 2017 through Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) and went live on 18ththe same month. Bitcoin had reached its maximum price of USD 20,000 one day prior. After the launch if futures, the price of Bitcoin tumbled in the coming weeks.
Giancarlo said that the administration had taken lessons from the past. The 2008 recession, which saw that collapse of the housing bubble, was not effectively addressed in time and he said that was the reason futures were introduced to deal a blow to the bubble before it inflated further and popped,
Coming out of the 2008 financial crisis, the legit criticism of regulators was along the lines of: Where were they during the expansion of the real estate mortgage bubble, and why didn’t they take steps to pop that bubble when they could have?” and, “We saw a bubble building and we thought the best way to address it was to allow the market to interact with it,
Was it Really Futures?
Many experts believe that there were other reasons to the pullback of bitcoin prices. In the latter half of 2018, less than a year later of futures launch, bitcoin was hovering at a low of USD 3000. Before the 2018 low, a research by the University of Texas, titled Is Bitcoin Really Un-Tethered?revealed that the inflation was due to price manipulation involving Bitfinex and its stable coin, Tether. Following the publication of the report, Bitcoin witnessed its price fall down to USD 6,300. The then recent Coinrail hack and the damming report was all that was needed to start a downhill trend that saw Bitcoin value be only a shadow of its highs.
Whatever the events may seem, the claim by Giancarlo does have merit since the San Francisco Federal Reserve also credits the launch of Bitcoin Futuresas a method to control the market.
The concluding sentence of Giancarlo said it all,
I believe it shows the power of markets to bring discipline to prices