ProCap CIO: Jane Street, other APs suppress BTC price through ETF structural flaws

Some market-making firms, including Jane Street, are suppressing Bitcoin's price, according to an analysis by Jeff Park, Chief Investment Officer (CIO) at ProCap. Writing on X, Park explained that large securities firms and investment banks, acting as Authorized Participants (APs), are leveraging an exemption from the U.S. Securities and Exchange Commission's (SEC) short sale regulation (SHO). This allows them to build short positions without buying the underlying shares and to hedge with futures instead of spot BTC. This practice, he argued, distorts the market's natural price discovery mechanism. Park asserted that this is not an issue limited to Jane Street but rather a structural flaw within the entire ETF system. He noted that even with the recent introduction of in-kind redemptions, APs continue to insist on hedging with futures. For Bitcoin to rise naturally, Park concluded, the ETF redemption mechanism and the incentive structures for APs must be re-examined. The analysis follows recent and widespread controversy across multiple online communities alleging that APs, including Jane Street, have used algorithmic selling at specific times to drive down the price of BTC.