While Bitcoin’s fluctuations in price and trading volume continue to confuse the “oracles of CNBC”, a prominent Japanese economist has written an article to explain what he believes stopped the 2017 Bull Run and why the roller coaster ride in 2018 caused almost the entire market to “crash”.
Did futures end the Bitcoin Code?
The Japanese economist Yukio Noguchi wrote an article for the Japanese magazine Diamond last week, which was very well received by crypto traders. It combines the beginning of the Bitcoin futures market with the end of the rapid price increase in December 2017. Read more about it.
The CBoE began trading Bitcoin futures on December 10, 2017, when Bitcoin’s price stumbled and fell by about $3,000. The Bitcoin price recovered and gained new highs to the $20,000 threshold, where the price jumped back and forth by thousands of dollars every other day. Noguchis emphasizes the following:
“Because it is now possible to trade Bitcoin futures, you will never see a rapid rise again.
Apparently, Noguchi is not alone in believing that the Bitcoin futures market was to blame at the end of the bull run in 2017. Fortune had published almost the same argument by economist of the Federal Reserve Bank in San Francisco under the title “How Futures Trading Changed Bitcoin Prices”.
“The rapid run and subsequent fall in prices following the introduction of futures does not appear to be a coincidence, but is in line with the trading behaviour typically associated with the introduction of futures markets for an asset.
While many suspect that the Bitcoin futures have negatively affected the price, an analysis suggests that the futures have had and continue to have virtually no impact on the Bitcoin price. In fact, futures trading only has an impact of 0.009 percent on the price of BTC.
What doesn’t kill Bitcoin Revolution should make it stronger
Taking the real estate crisis and the devaluation of the Japanese stock market in the 1990s as examples, Fed economists point out that new financial instruments have a record number of deflating financial bubbles, like this. In this case, when enthusiastic investors drove up Bitcoin’s price, the futures market opened up and pessimists were able to bet their money against the crypto currency for the first time.
Bitcoin’s rapid rise in 2017 brought public attention to crypto currencies and blockchain technology, which was good for the growth of the emerging blockchain sector. Some analysts have argued that the turbulent 2018 market will end up being good for the future of crypto currencies as weak coins die and disappear and established ones continue to rise, similar to the dotcom era.