This post was most recently updated on December 11th, 2018
Everyone who is still in the crypto market remembers when the Chicago Mercantile Exchange (CME) launched Bitcoin futures on 17 December 2017, that day the price of Bitcoin hit the top at $20,000 and after that started the downside, a downside that has kept going a year. Today, the price of Bitcoin is $3,600 and bears are still in charge. The launch of the Bitcoin futures on CME and the intense fall in Bitcoin’s price isn’t a coincidence. The paper Bitcoins being printed on CME are suppressing the bitcoin price. Doing this CME is increasing their role to set the price of bitcoin.
Bitcoin max supply is 21 million, and this is valid and can not be altered for real Bitcoins. However, the printing of paper Bitcoins on CME is increasing the supply of tradeable Bitcoins. CME has been doing this with gold for a long time. Large amounts of paper gold are traded on CME via COMEX leaving the price of real gold suppressed despite the fact that they should increase as fiat inflation increases around the world.
To see how negative was the CME Bitcoin futures for the crypto space, we can watch how COMEX has destroyed the gold markets. Gold is a physical thing and must be mined from the Earth, which requires large costs and efforts. Although that, COMEX and London OTC prints paper gold with the click of a button. The paper gold trading volume worldwide ratio compared to the physical is 233 : 1.
Those numbers are scaring. The volume of gold is $61 billion monthly on CME compared to the $145 million of Bitcoin futures volume. It is unimaginable what could be the effect on bitcoin markets if the volume of bitcoin futures grows to $61 billion. The problem is that those paper products are setting the price of these assets.
The same architects who ruined the gold price copy pasted the same scheme and used it to ruin bitcoin. And even worse traders on gold futures can request physical gold delivered to than, but no such choice exists for Bitcoin, removing even the slight possibility to affect the bitcoin price positively by creating any demand.
Meanwhile, the crypto market is tanking every day and many bitcoiners are unaware that behind this continuous downward is CME. They are experts to set prices for assets with a large market like gold and bitcoin price suppression is an easy task for them. The chart below shows how the futures volume increased consistently. In November Bitcoin futures volume on CME increased by 141% compared to October.
In November also in the month where bitcoin fell from $6,300 to $3,600 as shown in the chart below.
When the bitcoin revolution started people thought that the old financial institutions will stay watching without doing anything while bitcoin becomes a mass adopted currency. That is not the case, they have invented tools to suppress the price of gold which has been a currency for thousands of years.
Why Volume is Important?
Futures main component is volume, and when this increases the prices can be controlled. The value of the asses is determined from the subjective confidence price and not the real value. This is how markets work and in Wall Street, this is called “Tail is wagging the dog”, which means that a small or unimportant part of something is becoming too important and is controlling the whole thing.
How can bitcoin escape from the futures influence?
The Bitcoin futures are backed by the dollar, and it will take a dollar collapse to free Bitcoin from this large scheme of market manipulation.
The launch of CME Bitcoin futures can be considered an attack on the bitcoin market but there are other things in play. The United States debt is near $22 trillion, and the next crisis according to Ray Dalio, founder and Chairman of Bridgewater Associates will see the dollar become like the Turkish lira. According to him the crisis will happen in the next 2 years and will be an inflationary one. Bitcoin is positioned perfectly to take the place of fiat when the second fails, and we have seen this happen in Venezuela when cryptocurrency adoption is happening after the high inflation rates hit the local currency.
The bitcoin rally will need to wait until the dollar enters the hyperinflation cycle and the Bitcoin futures scheme collapses. When all this happens the bitcoin rally will be huge and maybe we will not need to convert it into fiat.
Do you think this bear market was caused by the futures market? Post your opinion in the comments below.
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