The FED and other well-known economists have pointed their collective fingers at bitcoin futures for leading the cryptocurrency market to plummet and see the third worst correction in its history.
Yukio Noguchi, a Japanese economist, has said in a column that the sudden change in trend from what was bull market to a strong bear cycle was sparked by the launch of the CBOE and CME bitcoin futures market in late 2017.
Late last year, the cryptocurrency market reached its highest peak, reaching $900 billion in valuation. The price of bitcoin, the most popular and also the most dominant cryptocurrency in the world, reached $20,000 and the price of ether broke past $1,400. However, in January, the price of cryptocurrencies began descending, eventually reaching a 70 percent correction in a span of seven months.
Investors such as BitMEX CEO Arthur Hayes explained that since cryptocurrency market is still virtually beginning and it has soared by more than 300% in a year, investors have to expect 70 to 80% corrections as they are normal.
However, Noguchi said that the link between the plunge in the price of cryptocurrencies and the futures market was not a mere coincidence, saying that the bitcoin futures market was the primary factor to the 2018 correction.
Noguchi continued to say that the cryptocurrency market would not be able to see a quick rise in price ever again, because of the existence of the futures market.
“Because it’s now possible to trade on bitcoin futures, you’ll never see a rapid surge again,” said Noguchi.
Many experts in the cryptocurrency realm have also offered different views into the futures market and its influence on the cryptocurrency industry. Some have said that because of the fixed amount of long and short contracts that endure in the futures market, it is not possible to control a market that is worth a few hundred billion dollars.
More to that, Noguchi’s claim that the cryptocurrency market would never see a swift surge again is identical with the assertions of the majority of economists prior to every major correction the cryptocurrency market went through in 2010, 2014, 2016, and 2018.
Every time bitcoin suffered a 70 to 80% correction, it bounced back higher than its previous all-time high. The 2018 correction is theoretically no different to the 2014 correction because both can be deemed as the “bubble” of retail traders, especially since institutional investors are not present in the space yet.
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