Bitcoin’s price movements have always been a topic of intense debate and speculation. Many people wonder if the price of Bitcoin is being controlled or suppressed by large players in the derivatives markets. This idea is not new and has been discussed for years, but recent events have brought it back into the spotlight. To understand this, we need to look at how derivatives markets work, how they affect Bitcoin’s price, and what evidence exists to support or challenge the idea that these markets are suppressing Bitcoin’s price.
Derivatives markets are financial instruments that derive their value from an underlying asset. In the case of Bitcoin, the underlying asset is Bitcoin itself. The most common types of derivatives in the crypto space are futures and options. Futures contracts allow traders to agree to buy or sell Bitcoin at a set price on a future date. Options contracts give traders the right, but not the obligation, to buy or sell Bitcoin at a set price before a certain date. These markets are used by traders to hedge risk, speculate on price movements, or leverage their positions.
One of the main arguments for price suppression is that large players, often referred to as whales, can use derivatives markets to influence Bitcoin’s price. For example, a whale might open a large short position in the futures market, betting that Bitcoin’s price will go down. If enough traders follow suit, this can create downward pressure on the price. When the price drops, it can trigger stop-loss orders and margin calls, leading to a cascade of selling. This can cause a sharp decline in Bitcoin’s price, even if the underlying fundamentals have not changed.
Another way derivatives markets can affect Bitcoin’s price is through funding rates. Funding rates are periodic payments made between long and short positions in perpetual futures contracts. When there are more long positions than short positions, longs pay shorts. When there are more short positions than long positions, shorts pay longs. High funding rates can encourage traders to open short positions, which can put downward pressure on the price. Conversely, low funding rates can discourage shorting and support the price.
Recent data shows that funding rates in the Bitcoin derivatives market have decreased, indicating a reduced demand for leverage. This suggests that traders are less willing to take on large positions, either long or short. This could be due to a number of factors, including increased risk aversion, tighter liquidity, or a lack of confidence in the market. When funding rates are low, it can be harder for large players to manipulate the price through derivatives.
Another factor to consider is the role of institutional investors. Institutional interest in Bitcoin has grown significantly in recent years, particularly through spot Bitcoin ETFs. These ETFs allow investors to gain exposure to Bitcoin without having to hold the actual asset. However, recent reports suggest that flows into spot Bitcoin ETFs have slowed, and large entities have reduced their holdings. This has led to a strain on structural support and a reduction in demand for Bitcoin.
The slowdown in ETF flows, coupled with a broader risk-off sentiment in global financial markets, has led to a significant erosion of investor confidence. This has impacted not only Bitcoin but also Ethereum and the broader altcoin ecosystem. The speculative momentum that often fuels altcoin rallies has diminished, leading to heavy pressure across the board. On-chain data shows a decline in large Bitcoin holders, suggesting that long-term investors may be selling, and an increase in smaller retail wallets.
The October 10 liquidation event was a stark reminder of the volatility and risks in the crypto market. Over $19 billion in crypto assets were liquidated in a single day, impacting leveraged traders and newer spot ETF investors. This event triggered withdrawals and a widespread reduction in speculative positions. The breach of Bitcoin’s 200-day moving average is a critical technical indicator, further suppressing demand and signaling a bearish trend for many analysts.
Despite these challenges, some analysts believe that Bitcoin is not in a structural top but rather in a late-cycle adjustment phase. Matrixport’s report indicates that Bitcoin has entered a consolidation phase, influenced by macroeconomic and market structural resistance. The Federal Reserve has signaled patience, with limited prospects for monetary policy easing in the short term. The dollar has stabilized from cyclical lows, and liquidity has tightened from mid-summer. Spot demand momentum has weakened after early ETF inflows.
Internal market dynamics show waning participation, with some large early holders taking profits, ETF flows slowing, and cryptocurrency market positions becoming more cautious following recent liquidation events. Bitcoin breaking below key cost benchmarks suggests that this is more likely a consolidation period rather than an immediate trend reversal. The report concludes that this is not a structural top but a late-cycle adjustment phase, potentially paving the way for more attractive entry points in the future. If liquidity improves or monetary policy signals become clearer, Bitcoin may resume its upward trend by 2026, but patience is still required for conditions to improve.
Citi warns that Bitcoin weakness may weigh on Nasdaq performance, while improved liquidity could support a rebound. According to Citigroup, Bitcoin’s recent weak trading pattern could serve as an early warning sign for the Nasdaq 100 Index’s potential decline. The analysis highlights that the U.S. Treasury’s cash balance rebuilding and a reduction in bank reserves of approximately $500 billion have led to liquidity tightening, suppressing the performance of Bitcoin and other risk assets. However, as the Treasury balance approaches the completion of its rebuilding phase, liquidity is expected to improve, potentially driving a year-end rebound in Bitcoin and equity markets.
The main source of sell-side pressure in the market is existing Bitcoin holders, according to analyst Checkmate. Revived supply and rising average coin age signal that long-term holders are selling, with $1.7 billion in daily realized profits. Nearly half of the selling pressure comes from coins held for six months to one year, indicating profit-taking from 2025 buyers. Realized profits have surged to about $1.7 billion per day, one of the highest levels seen this cycle. Meanwhile, realized losses have also climbed to $430 million per day, the third-highest level of the cycle, a high level of capitulation.
Central bank digital currencies are losing momentum as stablecoins gain prominence, highlighted at Hong Kong’s FinTech Week. Brazil’s pause on its CBDC project, Drex, exemplifies the global shift towards market-driven digital currencies. Despite widespread CBDC efforts, only three countries have launched them, while private sectors advance digital money infrastructure.
Bitcoin trades above $105,000, pinned down by overhead pressure, low ETF inflows, and weak retail demand. Ethereum remains below the 200-day EMA as traders. Institutional and retail demand remain largely suppressed, meaning investors are not convinced the trend has shifted from bearish to bullish. Some key technical indicators also lean bearishly, suggesting traders reduce exposure or stay on the sidelines, at least in the short term. The last two weeks have been characterised by outflows of $1.22 billion and $799 million, respectively. Meanwhile, the cumulative total net inflow volume averages $59.97 billion with net assets at $141.54 billion on November 10.
Retail demand has also not picked up following the October 10 deleveraging event, which saw over $19 billion in crypto assets liquidated in a single day. The Bitcoin futures Open Interest