Bitcoin Futures Popped 2017 Bubble, Says Insider

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A bombshell report from Coindesk says that the Trump administration colluded to pop the Bitcoin bubble in 2017.

Former CFTC chairman Christopher Giancarlo reportedly said that one of the “untold stories” of Bitcoin is how organizations within the Trump Administration sought to burst its bubble.

“One of the untold stories of the past few years is that the CFTC, the Treasury, the SEC and the [National Economic Council] director at the time, Gary Cohn, believed that the launch of bitcoin futures would have the impact of popping the bitcoin bubble. And it worked.”

Giancarlo doubled down on his statements earlier this week.

The first Bitcoin futures were introduced at the beginning of December 2017, just before price peaked and began a rapid decline that it has never risen back from.

Trump Administration Rains on Crypto Parade

President Donald Trump has made negative comments about Bitcoin this year, after years of not addressing the subject at all. Trump says he’s “not a fan.”

The issue of cryptocurrencies and blockchain is just one of several that Trump has broken ranks with other conservatives on. The insurgent semi-populist Republican is currently facing internal backlash over his decision to withdraw US troops from Syria.

Giancarlo explained that the introduction of a regulated futures market gave people with a negative view of Bitcoin an opportunity to put their money where their mouth is.

While margin trading has long existed on exchanges like BitMEX and Bitfinex, derivative products like the CME Bitcoin futures bring access to people who might not otherwise interact with cryptocurrency.

Giancarlo said:

“If you don’t have that derivative, then all you’ve got are believers [and] it’s a believers’ market.”

Futures markets play an understated role in determining the value of an asset. In Bitcoin, new investors might have a better understanding of a current price range if they see the size of the short and long futures pools.

Derivatives Enable Negative Sentiment

Giancarlo and his peers understood that giving traders a well-regulated market to express doubt in the booming Bitcoin market would probably introduce a shock to the system.

Futures were wanted by the Bitcoin trading community, but as was outlined above, that community is full of people who deeply believe in the asset.

Therefore most understood futures markets to be an opportunity to make even more money on long price movements, without necessarily considering that the opposite incentive would emerge as well.

By creating derivative futures, it becomes possible for someone to profit when the price goes long by owning the asset, and again when it shrinks by shorting the same.

To participate in all ways, a trader would have to be particularly flexible. The point is that with new trading instruments come new realities.

A few democrats have embraced cryptocurrency, particularly presidential candidates Tulsi Gabbard and Andrew Yang.

The incumbent administration, meanwhile, despite an allegedly pro-business agenda, has done little to help the plight of cryptocurrencies.

The situation creates for an interesting dynamic going into the 2020 election.

While most cryptocurrency supporters could never abide a liberal policymaker or vote for one, voting for somone like Donald Trump who has no interest in cryptocurrency (at best) also seems like a bad idea.