According to market analyst James Van Straten, derivative products such as options contracts—financial instruments that give investors the right but not the obligation to buy or sell assets at a predetermined price—will drive Bitcoin (BTC) market capitalization to at least $10 trillion.
Van Straten stated that options and other derivatives attract institutional investors and mitigate the impact of the iconic high volatility of digital assets on the market.
He pointed to the open interest in BTC futures at the Chicago Mercantile Exchange (CME)—the world's largest derivatives market—as evidence of this shift. Van Straten wrote:
Van Straten added that the reduction in volatility is two-sided, and the significant pullbacks commonly seen in the crypto market will also suppress the meteoric rises that traders have become accustomed to.
Market analysts continue to debate the impact of financial derivatives and investment tools on Bitcoin market cycles and the broader crypto market, with some believing all signs point to market maturity, while others argue that investor psychology is the true undercurrent driving the market.
There remains a divide among analysts regarding the influence of institutional investors, investment tools, and financial derivatives on the crypto market.
Seamus Rocca, CEO of financial services company Xapo Bank, told Cointelegraph that Bitcoin's four-year market cycle has not disappeared, and the market will continue to be influenced by news cycles, crowd sentiment, and investor psychology.
"Many people are saying, 'Oh, the institutions are here, so the cyclical nature of Bitcoin is dead.' I'm not sure I agree with that perspective," Rocca said.
Bitcoin advocate and market analyst Matthew Kratter stated that human psychology is the true undercurrent driving the market, and he believes that institutional investors are just as irrational as retail participants.
"The recent Bitcoin crypto bear market from 2021 to 2022 was primarily caused by the foolish actions of institutional investors at places like Grayscale, Genesis, Three Arrows Capital, and FTX," Kratter added.
Related: The crypto industry needs dual wallet management and AI monitoring to guard against North Korean hackers
Original article: “Analyst: Options and Derivatives Will Drive Bitcoin (BTC) Market Cap to $10 Trillion”
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