Bitcoin 'bouncing', is the culprit taxes?… "Similar to ETF tax-saving trading"

Source: BlockMedia Original Title: Bitcoin ‘Nolli-ggi’, the culprit is taxes?…”ETF tax-saving trading is similar” Original Link: Recently, the inexplicable sharp fluctuations observed in the Bitcoin(BTC) chart are believed to be not just market psychology shifts but possibly ‘technical trading’ by institutional investors for tax management.

Continuous ‘V’ shaped rapid changes…Market confusion

Cryptocurrency analyst Vivek Sen(Vivek Sen) shared a 1-hour candlestick chart of Bitcoin and expressed surprise, saying, “What on earth is happening to Bitcoin?”

Looking at the chart he shared, the Bitcoin price repeatedly exhibits a pattern where it sharply rises within a short period in a specific range and then immediately plunges back to previous levels. The volatility is too steep and the recovery too rapid for it to be caused by typical positive or negative news, raising suspicions among traders.

Possibility of ‘Heartbeat’ trading in ETFs

Bloomberg senior ETF analyst Eric Balchunas(Eric Balchunas) diagnosed, “The Bitcoin price chart looks very similar to ETF ‘Heartbeat(Heartbeat)’ trading.”

The ‘Heartbeat trading’ mentioned by Balchunas refers mainly to strategic trades used by ETF issuers to save on taxes. It occurs when large institutional(market makers) temporarily supply ETF liquidity and then immediately withdraw it.

During this process, capital gains within the ETF are handled via ‘in-kind redemption(In-kind redemption)’, allowing for legal avoidance or minimization of tax burdens.

Balchunas explained this flow as “short-term, tax-motivated trading that has nothing to do with actual market psychology.”

A glimpse into the institutionalized Bitcoin market

Experts believe that since the approval of Bitcoin spot ETFs, the market structure has rapidly become ‘institutionalized’, and complex tax strategies once seen in stock markets are now reflected in Bitcoin charts.

Especially as year-end approaches, with institutions rebalancing portfolios and optimizing taxes, Bitcoin prices may fluctuate not due to organic buying and selling but for ‘accounting purposes’.

Investors should be cautious… “Don’t fall for noise”

These volatilities are generally not indicators of market direction, according to experts. It is necessary to filter out technical noise and focus on long-term trends.