The recent action taken by the Commodity Futures Trading Commission (CFTC) against Binance doesn’t appear to have affected Bitcoin.
However, it’s unclear whether this lack of impact on the Bitcoin options and derivatives markets is positive or negative.
CFTC Takes Legal Action against Binance
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At the start of this week, the Commission sued Binance and its CEO Changpeng Zhao. This led to a 3.6% drop in the price of Bitcoin, bringing it down to $26,900.
Binance has been under scrutiny by various government agencies, including the CFTC, Securities, and Exchange Commission (SEC), Internal Revenue Service, and federal prosecutors.
The recent decrease in Bitcoin’s value might not be as significant because the Silicon Valley bank managed to sell its assets at a discount.
It sold the assets to First Citizens BancShares at a discounted price of $16.5 billion.
Additionally, the bank received a special credit line from the Federal Deposit Insurance Corporation to cover any potential losses in the future.
The tension within the cryptocurrency industry escalated as a result of a recent decision by a US Federal Judge.
In its decision, the Judge temporarily halted the planned acquisition of Voyager Digital by Binance as she granted the emergency stay.
CFTC-Binance Case Has No Effect on Bitcoin Futures Market
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Despite Binance holding 33% of the open interest worth $11.2 billion in Bitcoin futures, CFTC’s legal action has had no effect on Bitcoin.
Currently, the premium on two-month contracts is at 3.5%, which is below the neutral 5% cut-off.
This suggests there hasn’t been any rapid and aggressive sale of futures contracts with borrowed funds due to fear in the market.
If there had been, the premium indicator would have rapidly dropped to zero or even become negative.
Currently, the 25% skew ratio is at -5, suggesting that there is a slight reduction in the cost of protective put options. This implies that the recent news about Binance did not have a significant impact.
The CFTC action didn’t affect the 25% skew, indicating that big traders and market makers aren’t anticipating any significant changes in the market structure.
Volatility vs. Lucrative Gains: Chris Dunn Weighs in on Bitcoin’s Performance
In an interview, Chris Dunn who is a seasoned trader, investor, podcaster, and YouTuber reveals some interesting crypto trading secrets.
Dunn has a wealth of experience in traditional markets and has been active in the crypto space for nearly a decade.
In the interview, Dunn gave his thoughts on Bitcoin as an asset and why people were eager to purchase it.
Dunn expressed his belief that the pandemic prompted individuals who’re not involved in the crypto industry to ponder over the conventional monetary system.
This led to questions about the government’s ability to generate trillions of dollars and whether the US dollar should be trusted.
Dunn explained that Bitcoin has the potential to solve these financial issues following the pandemic and inflation.
He noted that Bitcoin has demonstrated a remarkable compound annual growth rate and has outperformed inflation rates.
Though Bitcoin’s future performance is uncertain, it has already proven to be a reliable store of wealth over the past decade.
This is true even during bear markets. Furthermore, when considering volatility, Bitcoin still ranks as one of the most lucrative assets globally.
The Volatility of Bitcoin’s Value: Can it truly be considered a Store of Value?
People are beginning to recognize that fiat currency may not be the most ideal form of money. There are potentially better alternatives for storing wealth, people just need to be more accepting towards them.
Bitcoin’s value has experienced significant growth since it was launched in 2009, rising from under $1,000 to an all-time high above $65,000.
However, it goes without saying that the token has also suffered its share of significant losses. In 2017, Bitcoin’s price surged from roughly $1,000 to almost $20,000, only to plummet under $5,000 in 2018.
It then rallied to over $65,000 in 2021 before dropping under the $20,000 mark in 2022.
Such volatility raises questions about whether Bitcoin can be considered a store of value. Purchasing it at the wrong time could result in substantial losses.