Researchers from the Federal reserve Bank (FRB) of San Francisco found that the emergence of futures contracts for bitcoin has become one of the reasons for the fall in the value of the first cryptocurrency in December 2017.
In the Bulletin of the Department the Economic Letter published yesterday, also said that the accelerated pace of the price growth of bitcoin and the subsequent collapse — a typical trading phenomenon that after the appearance of the respective derivatives facing any asset. In particular, according to economists, the trend line value of BTC is comparable to the graph “housing bubble” of the 2000s years in the United States.
“The further decline due to the emergence of tools that allow investors to trade pessimists are not in favor of the housing market. Similarly, the emergence of the blockchain has led to the creation of a new financial instrument. Many optimistic traders played on the appreciation of bitcoin, however, with the emergence of futures for BTC came in and the bears that triggered the return dynamics of the value of bitcoin”.
Up to a certain point, the positive predictions were justified. Later, on December 17, 2017, CME Group opened trading futures on BTC, losing the championship to the Cboe. It happened just at the historical peak value of cryptocurrency is one BTC then trading at a rate of approximately $20 000.
“As if to call down misfortune, the demand of optimists raised the price of bitcoins up, forcing more people to join the auction and raise prices further. The pessimists, by contrast, there was no way to earn their confidence in the fact that the value of BTC will collapse. So they could only wait for the hour”.
However, the negative trend also can not keep long. Since the number of bitcoins for mining decreases, the value of BTC as cross-border medium of exchange with low fees gradually equalized. The so-called “transactional benefits” in the end can boost the rate of BTC:
“Despite the fact that we understand some of the factors that influence bitcoin price in the long term, our understanding of the transactional benefits of bitcoin are too vague for the precise estimation of this price. But with the disappearance of the speculative trends in the cryptocurrency market they will most likely give quotes needs a stimulus.”
In the report, economists said, as the impact on the market is the emergence of another site that sells futures contracts on bitcoin, which could happen pretty soon. Last week it became known that Goldman Sachs is planning to trade non-deliverable forward contracts for BTC. The exact beginning date is not named, but The Times reported that the Board of Directors of the Bank has already signed an agreement on this initiative.