Bitcoin’s price is no stranger to volatility and the period between the second half of 2017 and the first half of 2018 is a clear example. The price went from about $2,600 to its all-time high of $20,000 in December 2017 and all the way down to $6,000 in July 2018.
At the time, though, no institutions were openly involved in the cryptocurrency market and the launch of institutional-grade Bitcoin futures contracts on both CBOE Global Markets and the Chicago Mercantile Exchange (CME) in December 2017 was perceived as a landmark achievement.
Shortly after CME launched its popular Bitcoin futures contract, however, the price tanked and entered into one of its most prolonged bear markets in history. A lot of members of the cryptocurrency community thought that it had something to do with the futures. That’s not the case with PlanB – the analyst who came up with the popular Bitcoin Stock-to-Flow (S2F) model.
Bitcoin Is Not Manipulated By Futures, Analyst Believes
Popular Bitcoin analyst PlanB took it to Twitter to lay down his two cents on the matter of price manipulation.
According to him, Bitcoin’s price is not manipulated by futures contracts. He said that “CME launched BTC futures Dec 2017. Many point to Dec 2017 ATH as proof futures have suppressed prices. But BTC prices stayed perfectly within S2F bands. I would have expected this to happen with or without futures. Nothing unusual.”
Going further, he also explained that during October 2017, Bitcoin was trading at around $7,000 – where it trades right now. However, the introduction of futures “sparked hope of massive institutional inflow (“the herd is coming”), and BTC jumped almost 3x to $20k in Dec 2017. The herd never came and prices bounced back to $7k and have been oscillating there 2.5 yrs.”
Bitcoin’s Stock-to-Flow Ratio
PlanB has come up with a hypothesis that could put Bitcoin in line with gold and silver using the cryptocurrency’s stock-to-flow ratio.
He describes stock as the size of existing stockpiles of reserves. Flow is the annual supply of Bitcoin on the market. According to this model, Bitcoin’s market cap following the halving should be about $1 trillion, putting a single coin at about $55,000.