Was Jane Street Suppressing Bitcoin Price?

“This is the grey window: a regulatory carve-out designed for orderly ETF market-making that is, structurally speaking, indistinguishable from a regulatory arbitrage with unmatched duration,” Park wrote.

Suppressing price discovery

When an ETF trades below its Net Asset Value (NAV), an arbitrage buyer typically steps in to buy the ETF and sell the underlying asset. In the Bitcoin ETF world, however, the AP is the arb buyer.

Park notes that this breaks the natural mechanism that would typically drive spot buying pressure. “The gap cannot close via the natural arb mechanism because the natural arb buyer chose not to buy spot.”

The researcher has concluded that no AP explicitly suppresses the Bitcoin price. However, the AP structure can suppress the integrity of the price discovery mechanism.

Skeptics weigh in

Parks analysis sparked a lot of reactions on social media, and some were skeptical. Dave Weisberger, Co-CEO of CoinRoutes, pushed back on the idea that this suppresses price over the long term.

“Empirically, this isnt true over any substantial time frame,” Weisberger argued. “Futures always resolve to spot on expiration.” However, Weisberger acknowledged that manipulation remains a concern.

Keone Hon, CEO of Monad, also challenged the theory. “This conspiracy theory doesnt hold up,” Hon replied. “Hedging short IBIT positions with long futures means that some other party will (on average) end up holding a short futures position that they have to hedge with a long spot position.”