Among the reasons that would explain the decline of the most famous cryptocurrency on the market is the imminent expiration of future contracts and the interest in acquiring large buyers.
Bitcoin (BTC) is the number one among all known cryptocurrencies. On the eve of the initial market launch of physical Bitcoin futures contracts from U.S.-based Bakkt, several web platforms reported surprising price losses.
Bakkt, the NYSE’s BTC trading platform, is the first of its kind to be approved by U.S. regulators. Therefore, the start of trading in the cryptocurrency was awaited with expectations as, according to the cryptocurrency trends portal, it was assumed that institutional investors would add the asset to their portfolios.
Similarly, the platform ‘Coindesk’ shows how the value of the coin changes in one day, from September 23 to 24, approximately.
While it is not uncommon for cryptocurrencies to devalue over the course of a few days or even hours, there is no consensus among specialists about its volatility. While some say that it is a very volatile asset due to its youth, others say that volatility is in the level of risk associated with the asset and others because its liquidity is limited, i.e., most cryptocurrencies are focused in few hands, which restricts The Infobae portal out loud also offers the asset.
One hypothesis of José Zárate, founder of Stamping, is that the cryptocurrency’s decline is due to large buyers wanting to acquire large quantities of Bitcoin in order to complete their stocks and sell them through contracts in the future.
«It creates a motivating factor (currency depreciation) for Bitcoin holders to sell it, and for large buyers to get cryptocurrencies on the market. The idea is to lower its value, and for fear that it will, it will.» continues to decline, owners are encouraged to sell so they don’t lose their money,» he says.
Also, the cryptocurrency trends portal explains that this fall is exactly parallel to the expiration of futures contracts on the Chicago Mercantile Exchange (CME), the US market for financial derivatives and commodities, which brought Bitcoin futures to the stock exchange. since December 2017 and already has more than 20 successful settlements of futures expirations.
For Gonzalo Sierra, professor of economics at the University of Piura, the case of Bitcoin stems from the fact that it is a highly speculative asset.
«In bitcoin futures, volatility is helping most investors to buy this cryptocurrency to speculate on the future price but not having bitcoins in the future, which means they will try to sell them before their expiration date, volatility increases because they are selling to make a» rollover «. [sell futures with a near expiration date and buy futures with a later expiration date],» he said.
For the professor, also, the fact that physical futures contracts were concluded with Bitcoin does not guarantee that cryptocurrencies are profitable, but only ensures transparency in transactions between the parties.
«What has been done is to put bitcoin in a market for buying and selling, but there is no guarantee that it is a good or bad product, it simply gives it a place for people to conduct transactions in a secure manner.» The futures market is changing the nature of bitcoin, it is a risk asset, its underlying value is zero because it does not have the properties of money, it is a speculative bubble, its price is supported only by speculation,» he said.