Meltem Demirors: Halving has no effect …
Meltem Demirors: Halving will not affect the price of bitcoin due to the development of derivatives
Coinshares Chief Strategy Officer Meltem Demirors entered the debate over the impact of the May 2020 drop in the block reward for adding blocks to the bitcoin blockchain on the leading cryptocurrency. Her answer is no.
Demirors believes that bitcoin is approaching the upcoming halving in a unique environment, which is determined by the existence of an established derivatives market that did not exist four years ago during the previous decline in awards. Most companies looking to capitalize on Bitcoin price changes will use derivatives rather than the underlying asset to do so..
“The topic of pricing was studied in the markets of other exchange commodities. Bitcoin is supposedly a digital exchange commodity. Usually the manufacturer sets the price of the commodity. When derivatives appear, he loses such a right, writes Demirors. – Derivative markets are a strange beast. Take oil, for example. The graph shows what has happened to the oil markets over the past 20 years. Derivatives dominate trading. Most firms trade paper contracts to speculate on the price of oil. The market is driven by speculation “.
Oil production versus futures trading volume
She notes that since the emergence of BitMEX in 2014, hundreds of companies have entered the derivatives trading space, including such a giant as the Chicago Mercantile Exchange..
“The more bitcoin becomes an investable asset, the more its price separates from its value and supply and demand. It becomes another sinkhole in the great game of global speculation. He becomes “financialized”. It is starting to correlate with global markets, ”she adds..
Demirors considers derivatives and bitcoin to be contradictory concepts, but at the same time admits that it is this part of the market that is currently growing the fastest..
Earlier, Bloomberg analysts noted that the trading volumes in the bitcoin derivatives market are 10-18 times higher than the volumes in the spot market..
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