Meltem Demirors, the CSO of CoinShares, has just explained why the Bitcoin price is not necessarily going to rally after its next halvening. Her main argument is that the growth of crypto derivatives will prevent producers (miners) from setting the price of Bitcoin.
A spanner in the works
Since BitMEX became a pioneer in the crypto derivatives market, the market has been getting more crowded. Derivatives such as options and futures still allow Bitcoin traders to get their kicks despite the declining volatility of this fledgling asset class.
CME Group finally launched its Bitcoin-settled Bitcoin futures on Dec. 17, which coincided with the price of Bitcoin taking a massive hit. Christopher Giancarlo, a former chairman of the CFTC, revealed the launch of these futures was plotted by the US government to pop the great Bitcoin bubble.
According to Demirors, price speculators will trade derivatives instead of the underlying asset. She predicts that Bitcoin will become another "backwater" like oil or gold whose prices are commanded by global speculation.
Things could be different
The upcoming halvening, which is expected to happen on May 14, 2020, is the linchpin of all bullish narratives surrounding Bitcoin since its supply will be basically cut in half. During its two previous halvening cycles, BTC managed to generate some amazing returns.
This time around, many experts believe that BTC might not repeat the success of its two previous halvings. Back in November, market analyst Willy Woo noticed that the Bitcoin price was way too bearish in the run-up to such a highly-anticipated event.