The struggle between Bitcoin's real and paper volumes reveals the secrets behind price trends. As cryptocurrencies evolve, spot ETFs remain delayed.
As the dynamics of the cryptocurrency market continue to evolve, the recent news that paper Bitcoin (BTC) trading volume has surpassed actual BTC trading volume has attracted attention. This dynamic involving Bitcoin futures contracts has far-reaching implications for the price of the cryptocurrency. In addition, it also gives us insight into the continued delays in the launch of spot ETFs.
The War Between Bitcoin and Gold
Historically, governments and central banks have held a large portion of the world's gold reserves. In contrast, Bitcoin has a decentralized fan base consisting of die-hard enthusiasts determined to reshape the financial world. However, the power dynamics between real Bitcoin (spot market) and paper Bitcoin (futures market) are causing waves in the crypto community.
In the past, derivatives were easily introduced to the masses because most gold reserves were stored in vaults that were almost impossible to audit. As a result, the value of gold was often manipulated by these big players. However, introducing such derivatives in Bitcoin, which is strictly protected by the community, is another matter.
According to the latest data from Glassnode, there are currently around 2.3 million Bitcoins on exchanges. In a hypothetical scenario, if the public tried to buy all of these tokens, it would only take $12 billion in futures contracts (taking into account the usual 5x leverage) to halt any upward price momentum.
Why are spot ETFs delayed?
In the context of the $20 trillion M2 money in the banking system, this number needs to be more significant. Therefore, it is attractive for an entity with $12 billion to profit by shorting BTC futures and pushing down its price.
On top of that, the daily trading volume in the futures market has increased significantly, dwarfing the spot market. Therefore, the movement of the spot market is largely influenced by the futures market, which suggests that the launch of the spot ETF will be delayed.
Interestingly, some believe that futures can affect BTC spot prices in both directions, but a drop in liquidity BTC will only push prices higher. It is worth noting that once the futures market begins to operate, the surge in Bitcoin prices seems to taper off.
It is worth noting that the tug-of-war between futures and spot markets could reshape the Bitcoin landscape. As the cryptocurrency community navigates this complex space, understanding these mechanisms becomes crucial for investors and enthusiasts.
