In response to Bloomberg’s article on Bitcoin’s ‘Bart’ trading patterns, Three Arrows Capital CEO Su Zhu explains they are not manipulation but rather due to derivative trading causing large price movements with comparatively small amounts of Bitcoin. Speaking to Luke Martin from Coinist Podcast, Zhu says there are a few reasons for the bart patterns but manipulation is not one of them.
What are ‘bart’ patterns
‘Bart’ patterns are a term traders give when a sharp rise in value is followed by minor back and forth volatility before falling back down to the pre-rise prices. This movement mimics the shape of famous Simpsons tv character - Bart Simpson’s head.
Bart trading pattern looks similar to famous tv character Bart Simpson. Source: BitOrb_Official
Bitcoin is known to produce these patterns on a semi regular occurrence, leading some speculators to suggest they are a result of market manipulation by large Bitcoin accounts.
Derivatives
When asked the reason behind these patterns, Zhu confidently suggested they are not a result of manipulation but rather a natural result of certain other factors including the rise of derivative trading. This form of trading creates large price movements with very little bitcoin.
“[...] some will call that manipulation, but I don’t see it as manipulation. I see it as simply the fact that the vast majority of bitcoin is held off these exchanges [...] and not being traded around. So a very small amount of the Bitcoin out there is moving the price.”
The majority of Bitcoin is not held on exchanges, Zhu adds, explaining that with such a small amount being traded, it is really only the price of that small volume that is being reported and all those who are not exposed to this volatility are not really affected at all.
Bitcoin’s use has changed
In response to Bitcoin’s general volatility, he explained that the use of Bitcoin has changed over time.
“Now, the general use of it to be swapped into fiat and to pay out is a lot less and as a result, I think the volatility may go higher over time, and not lower.”
