The stagnation in Bitcoin prices and the entry of institutional players into the market have raised claims of “price suppression” within the cryptocurrency community. Jeff Park, Chief Investment Officer (CIO) of ProCap Financial, discussed these claims and the behind-the-scenes workings of Bitcoin ETFs in a broadcast he participated in.
Jeff Park acknowledged that Bitcoin ETFs bring tremendous liquidity to the market, but added that this liquidity comes at a cost. Park stated, “Bitcoin ETFs are great because they provide liquidity to Bitcoin in ways that wouldn’t otherwise be possible, through the participation of institutional players. But providing liquidity has never been, and never will be, free.”
One of the most critical points highlighted in the interview was the legal exemptions enjoyed by Authorized Participants (APs). Park stated that market makers are exempt from “Reg SHO” (Short Selling Regulation) rules, allowing them to operate the arbitrage mechanism.
Park explained the situation as follows:
“Market makers have a very special and almost privileged right to short assets even if they don’t own them. In this process, they live in a kind of ‘financial limbo’; they don’t need to invest capital or borrow money. This structure, where they are the opposite of themselves, is a very powerful tool.”
Responding directly to claims of price suppression, Park stated that he did not agree with the sensational headlines suggesting that Wall Street was deliberately driving down Bitcoin’s price.
He argued that current price movements are largely due to actual spot selling by long-term investors.
Jeff Park stated that viewing Bitcoin as a commodity rather than a security offers a more “liberal” space for market makers.
*This is not investment advice.
