Derivatives products, like options contracts — financial instruments that give investors the right but not the obligation to buy or sell an asset at a pre-determined price — will drive the Bitcoin (BTCAccording to James Van Straten, a market analyst, the market cap is at least 10 trillion dollars.
Van Straten has said that Options and derivatives are the most important financial instruments. attract institutional investors Cushion markets against the volatility of digital assets.
The open interest on BTC Futures, which is traded at the Chicago Mercantile Exchange CME (the world’s biggest derivatives exchange), was cited as proof of a trend. Van Straten wrote:
“CME options open interest is at an all-time high, partly driven by systematic volatility selling strategies like covered calls. This points to a more mature market structure with deeper derivatives liquidity around Bitcoin.”
Reduced volatility works both waysVan Straten noted that crypto-markets are prone to massive drawdowns, which will impact the gains made by traders.
Analysts are still debating the effect of financial derivatives on the Bitcoin cycle, and the wider crypto market. While some say the signs all point towards a market maturity, others claim that the real undercurrent is investor psychology.
Related: Bitcoin’s ‘biggest bull catalyst’ may be the next Fed chair pick: Novogratz
Does the market cycle of four years still exist?
Analysts continue to be divided about the impact of institutional investors and other financial derivatives on cryptocurrency markets.
Seamus Rocca, the CEO of the financial services firm Xapo Bank told Cointelegraph: Bitcoin’s four-year market cycle isn’t dead The markets continue to be affected by the news cycle, investor psychology, and crowd sentiment.
“So many people are saying, ‘Oh, the institutions are here, and, therefore, the cyclical sort of nature of Bitcoin is dead.’ I’m not sure I agree with that,” Rocca added.
Matthew Kratter, Bitcoin enthusiast and market analyst said Human psychology is what drives markets. Institutional investors and retail traders are both irrational, according to this theory.
“The very last Bitcoin crypto bear Market from 2021 to 2022 was mostly caused by institutional investors doing really stupid things at places like Grayscale, Genesis, Three Arrows Capital, and FTX,” Kratter with added.
Magazine: Crypto traders ‘fool themselves’ with price predictions: Peter Brandt
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Source: cointelegraph.com
