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 stated that derivatives and options are a part of the financial market. attract institutional investors Markets are protected from high volatility, which is the hallmark 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 also dampen gains made by traders.
Market analysts are continuing to debate whether financial derivatives or investment vehicles have an impact on the Bitcoin cycle, and the wider crypto market. While some argue that the signs all point towards a market maturity, others claim that the real undercurrent driving markets 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?
The effect of institutional investors, financial derivatives, and investment vehicles on crypto markets is still a matter of debate among analysts.
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 said.
Matthew Kratter, Bitcoin enthusiast and market analyst said The real force behind the markets is human psychology, and institutional investors can be just as irrational.
“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 added
Magazine: Crypto traders ‘fool themselves’ with price predictions: Peter Brandt
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Source: cointelegraph.com
