The Future of Bitcoin: How Crypto Derivatives Will Shape the Market
As the world of cryptocurrency continues to evolve, experts are predicting that crypto derivatives will play a crucial role in shaping the future of Bitcoin. In a recent panel discussion at Consensus, industry professionals from the Chicago Mercantile Exchange (CME), TradingView, and TJM Institutional Services shared their insights on the impact of crypto derivatives on the market.
“Derivatives have always been an integral part of the crypto traders’ experience, but trading on centralized exchanges available from 2015 to 2022 meant many spot and margin traders had their ‘face ripped off’ by high fees and slippage.” - Pierce Crosby, TradingView
The Rise of Spot Bitcoin ETFs
The launch of a spot Bitcoin exchange-traded fund (ETF) is expected to play a key role in sending Bitcoin’s price to new heights. According to Crosby, ETFs provide a low-cost way for investors to quickly buy and sell assets, making them an attractive option for those looking to invest in Bitcoin.
The rise of spot Bitcoin ETFs
The Impact of Crypto Derivatives on Bitcoin’s Price Discovery
Giovanni Vicioso, CME Group’s global head of cryptocurrency products, believes that ETFs have brought in sidelined investors who were not comfortable with centralized exchanges. This influx of new investors could lead to increased liquidity and, subsequently, improved price discovery for Bitcoin.
CME contracts and the growth of their volumes
Bitcoin as a Hedge Against Inflation
Jim Iuorio, managing director of TJM Institutional Services, believes that recent United States Treasury auctions are a red flag. He predicts that the Federal Reserve will eventually have to cut rates and start easing again, which could be beneficial to stocks, risk assets, and Bitcoin.
Treasury auctions and their impact on Bitcoin
The Correlation Between Bitcoin and Traditional Markets
While some analysts believe that Bitcoin is a hedge against inflation and an asymmetrical performer against the stock market, others argue that the correlation between Bitcoin and traditional markets is still unclear. Crosby believes that crypto market price action at times does follow stocks, gold, and oil, but that crypto is also negatively impacted by internal black swans like the implosion of FTX exchange and large centralized decentralized finance businesses.
The correlation between Bitcoin and traditional markets
Conclusion
As the crypto market continues to evolve, it’s clear that crypto derivatives will play a crucial role in shaping the future of Bitcoin. With the launch of spot Bitcoin ETFs and the growth of crypto derivatives, investors are expected to flock to the market, driving up prices and improving liquidity. Whether Bitcoin will become a hedge against inflation or continue to correlate with traditional markets remains to be seen, but one thing is certain - the future of Bitcoin is bright.
The future of Bitcoin
