The launch of bitcoin futures at the end of last year, played a role in the subsequent movement of its price, according to the US Federal Reserve Bank Research. This is reported by Coindesk.
In an economic letter published by the Federal Reserve Bank of San Francisco, it is said that the rapid rise and subsequent decrease in the price of bitcoin against the background of futures launch is far from a coincidence. The event corresponds to the traditional behavior of the asset market after the launch of futures on its basis. A similar situation occurred with bonds in the early 2000s.
Rapid rise of the price of bitcoin and its decline following [the] issuance of futures on the CME is consistent with pricing dynamics suggested elsewhere in financial theory. And until December 17, those investors [optimists] were right: As with a self-fulfilling prophecy, optimists' demand pushed the price of bitcoin up, energizing more people to join in and keep pushing up the price. The pessimists, however, had no mechanism available to put money behind their belief that the bitcoin price would collapse. So they were left to wait for their 'I told you so' moment.
U.S. Federal Reserve Bank's San Francisco Research
CBOE and CME launched their bitcoin futures in mid-December. At the same time, the cryptocurrency reached its historic high above $ 20,000, after which it returned to $ 6,000 in early February.
They also suggest that the key factor that will determine the price of bitcoin in the long term will be its role as a means of committing transactions that are not constrained by state borders and characterized by low commissions, while the speculative component will gradually lose its significance.