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December 24, 2019 @ 23:40 +03:00
The tendency for bitcoin to multiply in value following regularly scheduled halving events should not be relied on in 2020. That’s according to a cryptocurrency asset manager who warned the bitcoin derivatives market may have wreaked havoc with BTC’s traditional pricing mechanisms.
Meltem Demirors, who oversees $1 billion worth of assets at CoinShares, said the introduction of derivatives has shifted focus away from the underlying digital asset. According to Demirors, the bitcoin derivatives market will pull focus away from the underlying market – to the extent that BTC’s halving pump could be affected.
Demirors says derivatives trading removes the ability for producers of a given product to set prices. She points to the inverse correlation between the rise of oil futures, and the steady decline of physical oil production. Worse still – the success of bitcoin as an investment vehicle may be the very thing that decalibrates its price-to-value equilibrium. If bitcoin becomes ‘financialized’ as Demirors warns, it loses any and all factors which once differentiated it from its fiat counterparts. Regardless of the long-term effects of bitcoin’s burgeoning derivatives market, one thing that’s certain is the tendency for paper contracts to siphon trade volume away from the asset in question.