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Bitcoin bull and Fundstrat cofounder Tom Lee said last week that he sees a link between the expiration of Bitcoin futures and the cryptocurrency’s “gut-wrenching” decline. Bloomberg reported his remarks in a report published earlier this week.

More specifically, Lee said that the ‘significant volatility’ of the CBOE and CME futures have been ‘awful.’ He cited Justin Saslaw, who theorized that Bitcoin falls with impending expiration. There have been six expirations since the launch of CBOE’s Bitcoin futures; the most recent one happened on June 13.

Time to buy the dip?

Lee wrote that Bitcoin fell 18 percent during the ten-day period preceding the latest expiration.

Holders Sell Off to Increase Profits on Futures

According to Bloomberg, the reason for this is that “if a trader is long Bitcoin and short the futures, as contracts move closer to expiry, holders may sell a large share of the coins at volume weighted average price (VWAP) to minimize tracking error.” However, the holder may sell their remaining BTC to cause a drop in price, which will, in turn, cause the short position in the futures to close in a more profitable position.

Lee added that low inflows of capital into the crypto market this year may be negatively affecting the price of BTC, despite the fact that this year, the number of ICOs has grown and mining rewards are up. He also cited a lack of clear, appropriate regulations for the crypto space as a hindrance to the industry.

Lee’s remarks stand in contrast to predictions he made in February when he said that Bitcoin would soar to record heights in July. In a note to a client, Lee wrote that “73% of bitcoin bottoms are V-shaped. This recent 70% decline is severe,” but “we can see a case for bitcoin’s resilience here given the sharpness of the recent decline.” He cited data collected from prior crashes in Bitcoin’s price.

However, the Bitcoin markets have experienced an influx of entirely new kinds of investments. Market patterns that applied in the past may have been rendered obsolete by the changing culture of BTC–only time will tell.

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