For a long time, Bitcoin has been seen as the perfect terrain for financial speculation by traders around the world. A fame that is only increased by the fact that a good part of the companies and infrastructure created around BTC, serve the interests of traders. However, this situation is changing rapidly, now that, as Scott Melker commented in the Tweet of the day traders no longer dominate Bitcoin:
The relationship of traders and Bitcoin
Trader activity is both necessary and dangerous for Bitcoin. And it is that, on the one hand, traders carry out a fundamental task for the functioning of the market. Performing retail operations that provide liquidity and adjust the price of the cryptocurrency according to supply and demand.
However, at the same time, the fact that traders have long been the main force of the crypto market, has meant that it does not achieve the long-awaited stability in its price. Well, being very short-term investors, traders operate according to basically speculative criteria. Which makes Bitcoin’s up and down movements even sharper.
A situation that is beginning to change as Bitcoin reaches maturity in its market. Well, when it begins to be considered a solid financial asset by traditional investors. An increasing proportion of the participants in the crypto market is being made up of institutional investment funds. Which are gaining a greater weight against traders as Scott Melker commented on his Twitter account:
«Traders are no longer the primary drivers of Bitcoin’s price or narrative».
In this way, Melker would be referring to a process that, ultimately, could be beneficial for the Bitcoin market. Well, if it begins to be dominated by the flows of institutional investors, with a long-term vision. This could finally achieve greater stability in its price.