The Federal reserve Bank in San Francisco published a letter of may 7, which stated that the fall in the price of bitcoin (BTC) after it reached a peak in the area of US $ 20,000, was the result of launching a bitcoin futures.
The letter States that “the rapid growth and subsequent fall of prices after the introduction of futures is not a coincidence” and “this is consistent with the behavior of prices when the market of a specific asset will appear futures”.
The highest price for bitcoin coincided with the introduction of bitcoin futures on the Chicago Mercantile exchange (CME) in mid-December last year. A week earlier the Chicago Board options exchange (CBOE) launched futures on bitcoin, although volumes were significantly lower, the study said.
According to the letter, optimistic investors who are betting that the price will rise, was the only driver of growth in bitcoin. Constant growth rates attracted more optimists who, in turn, increased the demand even more.
The pessimists had no available instrument to play on the slide until, until there were futures on bitcoin. New investment opportunity led to the fall of demand in the market and, consequently, to a drop in prices.
… The launch of futures on bitcoin allowed pessimists to enter the market, which contributed to the change in the dynamics of prices.
The letter States that the price of bitcoin has not collapsed overnight after the launch of futures the CBOE and CME due to the relatively low trading volume for this asset in the futures market.
According to the letter, the futures price of bitcoin will depend on the demand and adoption of cryptocurrencies to traditional financial institutions as “the working payment method or investment product.”
If another cryptocurrency stent more widely used as a medium of exchange in the markets, which now dominates bitcoin the demand for bitcoin may fall sharply, because in this market, the winner is likely to get the entire market.