BTC Fixed Supply Indicates That Futures Are Not A Threat To Price

One Bitcoin price analyst is in the crypto news today for noting a full analysis on one of the industry’s best-known prediction models. The BTC fixed supply on the futures markets will not undermine the cryptocurrency, according to the analyst PlanB.

In a quite long Twitter debate on December 26, the analyst who is the father of the Stock-to-Flow tool dispelled his fears about Bitcoin futures markets and how they could negatively impact the price of the most dominant cryptocurrency.

“I don’t see futures as a threat to #bitcoin,” PlanB noted.

These comments follow months of speculation about futures and what came from Bakkt’s offering going live in September this year. A couple of days after the launch, we can see that the Bitcoin markets fell significantly which lead to widespread theories of futures manipulating the markets.

At the time, Bakkt came with comments in the Bitcoin news and argued that its product was aiding price discovery. The BTC fixed supply and volumes were nonetheless lower than expected. This underwhelming performance added to the suspicion that futures’ market impact was not entirely organic.

However, PlanB thinks that the nature of Bitcoin makes the cryptocurrency unable to suffer similar problems to precious metals when it comes to trader speculation. As he noted:

“Central banks can future sell large amounts with unlimited fiat money, pushing future prices below spot (backwardation), but spot markets will not follow all the way, because they run out of sellers (unlike gold, supply is inelastic).”

The Stick-to-Flow is a measure that he invented, referring to the amount of Bitcoin that is currently in existence – the stock versus the “new” coins coming into circulation – the flow. This data has already highlighted that by 2025, Bitcoin’s Stock-to-Flow ratio will overtake the one of gold.
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PlanB talked about the BTC fixed supply and said that it meant that an attempt to infiltrate futures markets would fail to produce long-term impact.
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“…I was talking about spot and futures prices (‘discovered’ at exchanges) that in case of commodities influence producers/supply, but not with bitcoin,” PlanB said in a summary of his argument.

Meanwhile, in December this year Alex Kruger noted that even in Bakkt’s case, only a few participants choose to take custody of BTC instead of rolling their contracts as with regular futures contracts.