Bitcoin’s decline from $19,500 in December 2017 was due to the listing of futures contracts directly tied to the value of the cryptocurrency, according to new research published today by the San Francisco Federal Reserve.
Four researchers from the regional Fed bank “The rapid rise and subsequent fall in price following the emergence of futures does not seem to be a coincidence,” writes in its report written by .
Fed policymakers, especially in recent months, have downplayed Bitcoin’s promise as an alternative currency to the dollar or other central bank-backed currencies.. San Francisco Fed President John Williams, who will travel to New York next month to head the regional Fed there, is among those names.
Williams talked about cryptocurrencies in general and Bitcoin in particular last April. “One of the problems they have is that they are extremely volatile.”
Sometimes, futures, which reduce volatility in the underlying asset, emerged this time to help Bitcoin’s decline.
Futures exchanges CME and CBOE The enactment of contracts gave Bitcoin pessimists an easy way to bet that value will fall.. “With falling prices, pessimistic market players started making money on their bets, putting further downward pressure on prices with more short selling,” the report said. statements were included.