With new things like bitcoin derivatives, traders typically err on the side of safety. This leads to greater volatility and larger price swings as relatively small events relating to derivatives become exaggerated by larger scale adherance to proactive damage control. Initially btc derivatives should increase volatility. But as time goes on and it becomes a better known phenomena, volatility and price swings should decrease unless something crazy happens.
Derivatives should be a lot like forks. Initially there were large price swings and high volatility whenever a fork announcement or rollout was deployed. As time passed and people realized forks were not doomsday scenarios for bitcoin, volatility related to forks declined.
Derivatives should follow that same format. Although derivatives also carries a potential to increase volatility in certain scenarios if coordinated pump and dump occurs with derivatives stacked on top to boost potential profits. It depends on trading volume and viability. The higher trading volume is, the more difficult and unfeasible it becomes to manipulate price. Insider trading (if it exists) could be the best scenario for manipulation if not timing large dumps to coincide with short selling.
Topic: Will Bitcoin derivatives decrease volatility in the price? (Read 103 times)
It looks like regulated instruments like Bitcoin futures, might just be the answer to Bitcoin's volatility. These instruments wants
to trade within safe margins and the regulators will structure the regulations to protect the investor/consumer, before they
allow these instruments. Will these traders manipulate, regulated Bitcoin exchanges to create a conducive environment for safe
trading in futures? {Using ONLY regulated exchanges for their price determination?}
These Wall Street guys are very clever, so we should anticipate smarter trading instruments/derivatives to be introduced in
the future. {To protect their investments}
to trade within safe margins and the regulators will structure the regulations to protect the investor/consumer, before they
allow these instruments. Will these traders manipulate, regulated Bitcoin exchanges to create a conducive environment for safe
trading in futures? {Using ONLY regulated exchanges for their price determination?}
These Wall Street guys are very clever, so we should anticipate smarter trading instruments/derivatives to be introduced in
the future. {To protect their investments}
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