Wall Street made $2.7 trillion in two months using Bitcoin futures to harvest Asia

On December 11, 2017, the Chicago Board Options Exchange (Cboe) launched Bitcoin futures trading, marking the milestone of Bitcoin’s entry into Wall Street.

On the same day, the Bitcoin futures contract for delivery in January was quoted at $17,680, with a daily high of $18,850, an increase of nearly 22%.

On December 17, Bitcoin futures hit an all-time high of $19,783, and the market value of 21 million Bitcoins reached $4.15443 trillion.

At that time, the world's major media had mixed reviews, with staunch bulls and bears taking turns to express their views. However, in the retail market, investors have reached a climax, and no one would read the negative comments. They wished that Bitcoin would rise 10 times again so that they could also get on the bus of Bitcoin's sudden wealth.

However, in the face of Bitcoin's delusion of replacing legal tender, governments around the world have actually begun to take action, quietly joining forces to crack down on and ban Bitcoin.

Opposition countries:

Russia has historically been opposed to cryptocurrencies, believing that cryptocurrencies are financial instruments, not currencies, and the main regulatory agencies are the central bank and the Ministry of Finance.

China considers Bitcoin to be a virtual commodity, not a digital asset. Cryptocurrency exchanges have been facing high regulatory scrutiny until yesterday when regulators decided to shut down virtual currency exchanges in China.

Supported countries:

As the birthplace of Bitcoin and blockchain technology, the Japanese government attaches great importance to the development of digital currencies such as Bitcoin. Japan has previously issued licenses to exchanges and Internet companies to allow ICO projects to proceed.

Switzerland: The regulator of cryptocurrencies in Switzerland is the Swiss Financial Market Supervisory Authority (FINMA), which considers cryptocurrencies to be assets rather than securities.

Unclear attitude:

The United States has a variety of regulatory agencies, and token issuance is extremely complicated. The Commodity Futures Trading Commission (CFTC) has included digital currencies in the category of commodities and actively regulates them.

In the United Kingdom, cryptocurrencies are regulated by the Financial Conduct Authority. Currently, the regulation of ICOs and distributed ledger technology is unclear, but relevant regulations are expected to be introduced in the near future.

Since China has the largest number of Bitcoin players in the world, it makes sense for China to start regulating. With the strengthening of Chinese regulation and the rise in Bitcoin prices, the main market for Bitcoin has shifted from China to Asia. It can be said that Asians are supporting the entire Bitcoin trading market.

This also gave American capitalists the best opportunity to reap profits since the 21st century. Capitalists and bankers on Wall Street, through their political influence and hundreds of years of experience in playing with the capital market, started a life-and-death game to reap profits from Bitcoin players.

On the one hand, Wall Street capitalists changed the rule that the Bitcoin market can only be traded in one direction by designing Bitcoin futures contracts, allowing market participants to engage in long and short game. This rule is also an important rule for harvesting the whole world.

On the other hand, Wall Street capitalists continue to influence the US government's policy on Bitcoin, forcing the US government to step up its regulation of Bitcoin. The US government's regulation of Bitcoin began in 2014, but due to the innovative atmosphere in the United States and the influence of Bitcoin at the time, the US government did not take any drastic measures against Bitcoin.

With the participation of market participants, especially Chinese and Asian players, it attracted the attention of Wall Street capitalists. This layout lasted for 3 years.

During these three years, the record highs of Bitcoin even surpassed the Dutch tulip bubble 400 years ago. The soaring prices, coupled with the intervention of governments around the world, made Wall Street capitalists wait for the time to reap the harvest. They stepped up their lobbying efforts on the government and strengthened the regulation of Bitcoin. At the same time, through Bitcoin futures, Wall Street capitalists continued to increase short options on Bitcoin in the trading market, holding important harvesting chips, waiting for the US government to issue a Bitcoin regulatory ban.

Next, we saw that in just two months, the US government took frequent actions, using methods such as supervision, prohibition, and litigation, and immediately raised the regulatory atmosphere of the Bitcoin market to the most stringent level in a short period of time.

In December 2017, the U.S. Commodity Futures Trading Commission (CFTC) issued a subpoena to Bitfinex, one of the world's largest cryptocurrency exchanges, and its affiliated digital token issuing company Tether regarding digital cryptocurrencies because there were doubts about the funds supporting its tokens.

In January 2018, the CFTC announced that it had filed lawsuits against three virtual currency trading platforms, alleging that they deceived customers and violated commodity trading rules.

On February 6, 2018, the U.S. Senate Banking, Housing and Urban Affairs Committee will hold a hearing on virtual currencies. The U.S. media believes that this hearing, titled "Virtual Currency: The Supervisory Role of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC)", will be a critical moment for virtual currencies.

Since the listing of Bitcoin futures, US leveraged funds have been holding a large number of Bitcoin short options. On December 11, the day of listing, the main contract (XBT/F8) had 828 speculative long positions and 2,199 short positions. In two months, the accumulated short positions reached 500.

The Bitcoin futures players here can be divided into four categories: Dealer Intermediary, Asset Manager/Institutional, Leveraged Funds, and Other Reportables.

From the specific position report on December 11, we can see that - broker positions: 39 long positions, 0 short positions; asset management companies/institutions: positions are 0; leveraged fund positions: 259 long positions, 1,138 short positions; other reportable positions: 934 long positions, 1,895 short positions.

Leveraged funds and other reportable positions accounted for the majority of short options, 1,138 and 1,895 respectively. Since each transaction must correspond to both parties, that is, larger funds mainly short, while small funds mainly long.

Today, the CME Bitcoin futures price is around $7,400, which has fallen by two-thirds from the high of $19,783 on December 17, 2017, and the market value has shrunk by $2.7 trillion.

Most of the $2.7 trillion flowed into the pockets of Wall Street capitalists, and the region with the greatest losses was Asia.

Now, everyone knows that the harvest took only two months, but in fact, Wall Street capitalists waited for three years, using capital and political means to move step by step. Whether the US government was involved in this is for everyone to think about. If you are interested, you can learn about the incident in 1992 when Soros attacked the British pound and forced Britain to withdraw from the European exchange rate system.

The capital market is full of lies, temptations, opportunities and challenges. Will investors be harvested like leeks, or will they learn to use knowledge to break the rules and reshape the market? The answer lies in everyone's heart.