1/ there is a very real possibility the price of bitcoin does not go up after halving.
for the first time, there is a robust derivatives (futures, options) market for bitcoin. most firms looking to speculate on bitcoin will trade a derivative, not the underlying.
for the first time, there is a robust derivatives (futures, options) market for bitcoin. most firms looking to speculate on bitcoin will trade a derivative, not the underlying.
2/ a topic that’s been studied in other commodities markets is how pricing is set. bitcoin is, arguably, a digital commodity.
normally, producers set the price of a commodity (classic S = D = P from Econ 101)
when derivatives take off, producers lose the right to set prices
normally, producers set the price of a commodity (classic S = D = P from Econ 101)
when derivatives take off, producers lose the right to set prices
3/ derivatives markets are a strange animal. let’s take oil. this chart from @FT shows what’s happened to oil markets over the last 20 years.
derivatives dominate trading. most firms trade paper contracts to speculate on the price of oil. the market is driven by speculation.
derivatives dominate trading. most firms trade paper contracts to speculate on the price of oil. the market is driven by speculation.
4/ there is a new market developing for bitcoin - one driven by speculative trading and enabled by derivatives.
@BitMEXdotcom was the first to crack this market. then the 10,000 lb gorilla @CMEGroup got in the game. now there are hundreds of new firms popping up.
@BitMEXdotcom was the first to crack this market. then the 10,000 lb gorilla @CMEGroup got in the game. now there are hundreds of new firms popping up.
5/ the more bitcoin becomes an investable asset, the more it’s price becomes decoupled from its value and its supply and demand.
it becomes yet another backwater in the great game of global speculation. it becomes “financialized.” it becomes correlated to macro markets.
it becomes yet another backwater in the great game of global speculation. it becomes “financialized.” it becomes correlated to macro markets.
6/ today, the bitcoin derivatives market is still small. but the market will grow quickly.
will be interesting to watch. derivatives on bitcoin are an oxymoron. but they’re the fastest growing part of the market... 💸
(derivatives 101 here - investopedia.com/articles/optio…)
will be interesting to watch. derivatives on bitcoin are an oxymoron. but they’re the fastest growing part of the market... 💸
(derivatives 101 here - investopedia.com/articles/optio…)
