Federal Reserve branch confirms Bitcoin futures launch importance

One of the departments of the United States Federal Reserve System - the Federal Reserve Bank of San Francisco (FRBSF) has confirmed the influence of the launch of Bitcoin futures for the price of this digital currency. This has been posted on the official website of this FRB.

Bitcoin’s price motion resembles the dynamics of mortgage boom of the early 2000s. Interestingly enough, the authors of the report note that despite the fact that the Chicago Board Options Exchange (CBOE) was actually the first one to launch Bitcoin futures, the news on the Chicago Mercantile Exchange (CME) derivatives has been the catalyst of the trading volume growth.

The price of Bitcoin will grow if the transactional demand grows faster that its supply, the FRBSF researchers tell. The transactional demand depends on the popularity of Bitcoin and its wide use by institutional organizations.

As concluded by the experts behind the report, the price dynamics of Bitcoin largely corresponds with the statements provided in Tranching, CDS, and Asset Prices: How Financial Innovation Can Cause Bubbles and Crashes made by Ana Fostel and John Geanakoplos in 2012. Traders pump up the price right before the shorting opportunities become available, and afterwards, bears arrive on the scene and their actions lead to the massive drop.

Overall, the FRBSF researchers think that Bitcoin would lose its speculative nature over time and will return to its initial goals set by its creator Satoshi Nakamoto - a cross-border digital payment tool.

Bitnewstoday has also called the launch of Bitcoin futures the #1 cryptocurrency market event of 2017.