Researchers Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak, and Patrick Shultz posted on Federal Reserve Bank of San Francisco an economic letter relating Bitcoin price peak and collapse at the time of CME futures debut.
As any attempt to explain price movements, this implies in a very selective analysis of historical data and forces in play. And nailing a single influence from having more available short selling instrument is likely oversimplistic. However, article does point to a general effect from trading behaviour – as could be ‘buy the rumors sells the news’ – that may give an insight for next similar events.
“…The peak price coincided with the introduction of bitcoin futures trading on the Chicago Mercantile Exchange. The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence. Rather, it is consistent with trading behavior that typically accompanies the introduction of futures markets for an asset…”
“With the introduction of bitcoin futures, pessimists could bet on a bitcoin price decline (…) With falling prices, pessimists started to make money on their bets, fueling further short selling and further downward pressure on prices.”
“We suggest that (…) optimists bid up the price before financial instruments are available to short the market (…) Once derivatives markets become sufficiently deep, short-selling pressure from pessimists leads to a sharp decline in value. While we understand some of the factors that play a role in determining the long-run price of bitcoin, our understanding of the transactional benefits of bitcoin is too imprecise to quantify this long-run price. But as speculative dynamics disappear from the bitcoin market, the transactional benefits are likely to be the factor that will drive valuation.”