3 Key Data From Bitcoin’s Derivatives Markets To Know To Better Understand Its Price Evolution
Even as a HODLer, you need to understand these metrics.
Bitcoin was created by Satoshi Nakamoto to provide a leaderless P2P payment system with a superior programmatic monetary policy. Bitcoin frees us from the yoke of the banking middlemen and payment giants like PayPal for example.
To take advantage of Bitcoin, the best thing to do will always be to buy directly on the spot market before sending your BTC to cold storage to have the private keys in your possession. The golden rule has not changed since the creation of Bitcoin: Not your Keys, Not your Bitcoin.
That being said, it turns out that some people don't want to take on the responsibility of securing their money themselves. These people prefer to trust a third party such as a bank or an exchange platform. They are interested in Bitcoin as a hedge against inflation and as a financial investment with high potential returns, but its liberating power is not their priority.
More and more of these investors prefer to invest in companies that give them indirect exposure to Bitcoin. I'm thinking of mining companies, MicroStrategy, and Coinbase. This is not what I recommend, but I understand the position of some.
These people find it advantageous to invest in a Bitcoin ETF or the futures market. We talk about Bitcoin's derivative markets. This leads to a lot of problems, as I have already explained in “Bitcoin Futures Market 101”. Nevertheless, these derivative markets are there, and they influence the price of Bitcoin, whether you like them or not.
Rather than being subjected to them without understanding them, it's best to get to know how they work, to better understand their impact on the price of Bitcoin. I've already talked to you before about how leverage trading works, and why it's something to be avoided at all costs in order not to lose a lot of money.
In what follows, I'll show you 3 key data of Bitcoin's derivative markets that you should learn about and monitor from time to time to better anticipate what can happen to the Bitcoin price in the short term. You'll see that I often talk about these metrics in my articles about the evolution of the Bitcoin price.
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