Among all known cryptocurrencies , Bitcoin (BTC) is number one. Various web platforms reported the surprise drop in the currency on the eve of the US firm Bakkt’s physical Bitcoin futures contracts hitting the market for the first time.
Bakkt, the New York Stock Exchange’s BTC trading platform, is the first of its kind to receive approval from US regulators. For this reason, the start of its operations with the cryptocurrency was expected with expectations since, according to the crypto trend portal, it was thought that institutional investors would add the asset to their portfolios.
Likewise, the ‘coindesk’ platform shows how the value of the coin went in one day — from September 23 to noon on September 24 — from having a value of US $ 9,500 to a near floor of US $ 8,000, a fall of 18.75%, approximately.
Although it is not unusual for the cryptocurrency to lose value in a couple of days and even hours, there is no consensus among specialists regarding its volatility. While some say that it is due to the fact that it is a very volatile asset due to its youth, others say that the volatility lies in the level of risk associated with the asset and others because its liquidity is limited, that is, most cryptocurrencies are concentrated in few hands which makes the supply of the asset is also limited, according to the infobae portal.
One hypothesis considered by José Zárate , founder of Stamping, is that the fall of the cryptocurrency is due to the fact that large buyers seek to acquire large amounts of Bitcoin to complete their stock and sell in the future through contracts.
“A motivating factor (lowering the value of the currency) is being created for Bitcoin holders to go out and sell and thus, large buyers can acquire the cryptocurrency in the market. The idea is to lower its value and for fear that it continues to decline, holders are encouraged to sell so as not to lose their money, “he says.
Likewise, the crypto trend portal explains that this fall occurs precisely in line with the expiration of the futures contracts offered by the Chicago Mercantile Exchange (CME) – the US market for financial derivatives and basic products – which launched the Bitcoin futures on the stock market since December 2017 and already has more than 20 successful settlements of futures maturities.
For Gonzalo Sierra , professor of economics at the University of Piura, the fall of Bitcoin is due to the fact that this is a very speculative asset.
“In Bitcoin futures, volatility adds to the fact that most investors buy this cryptocurrency to speculate with the future price but not to have Bitcoins in the future, that is, they will try to sell them before their expiration date. In the dates close to expiration volatility increases because they sell to make a ‘rollover’ [sale of futures with near expiration and purchase of futures with expiration at a later date], “he said.
Likewise, for the professor, the fact that physical futures contracts are made with Bitcoin does not guarantee that the cryptocurrencies are profitable, it only ensures transparency in the operations between the parties.
“What has been done is to enter the Bitcoin into a buy and sell market, but this does not guarantee that it is a good or bad product, it is only giving it a space so that people can do operations safely. . I do not see that the futures market changes the nature of Bitcoin, it is a risky asset whose underlying value is zero because it does not have the characteristics of money, it is a speculative bubble, its price is supported purely by speculation, “he said.