Derivative products such as option contracts — financial products that are not required to sell or sell funds to investors will increase the market capitalization of Bitcoin (BTC) to at least $10 trillion, according to market analyst James Van Stratin.
Van Straten said options and other derivatives are attracting institutional investors and the cushion market from the high volatility that is characteristic of digital assets.
He pointed out that he is interested in BTC futures at the world’s largest derivatives market, Chicago Mercantile Exchange (CME), as evidence of the shift. Van Stratin wrote:
“Open interest in CME options is the highest ever driven in part by systematic volatility sales strategies like covered calls. This refers to a more mature market structure with deeper derivative liquidity around Bitcoin.”
sauce: James Van Stratten
The decline in volatility works both ways, and the overwhelming drawdown common to the crypto market attenuates the meteor profits that traders are used to, Van Stratin added.
Market analysts continue to discuss the impact of financial derivatives products and investment vehicles on the Bitcoin market cycle and the broader crypto market, with some arguing that some indications point to market maturity, while others say investor psychology is the true undercurrent that drives the market.
Related: Bitcoin’s “bill catalyst” could be the next Fed chair pick: Novogratz
Is the four-year market cycle dead?
Analysts remain divided on the impact of institutional investors, investment vehicles and financial derivatives on the crypto market.
Seamus Rocca, CEO of Financial Services Company Xapo Bank, told Cointelegraph that Bitcoin’s four-year market cycle has not died, and the market continues to have the impact of the news cycle, crowd sentiment and investor psychology.
“So many people say, ‘Oh, the system is here, so the cyclical kind of nature of Bitcoin is dead,” Rocca said.
Bitcoin advocate and market analyst Matthew Clutter said human psychology is a true undercurrent of moving markets, and institutional investors are just as irrational as retail participants.
“The last Bitcoin Crypto Bear Market from 2021 to 2022 was caused primarily by institutional investors doing really stupid things in places like Grayscale, Genesis, Three Arrows Capital, FTX and more,” Kratter added.
magazine: Crypto Traders “deceives themselves” with price predictions: Peter Brandt
