Analysts say derivatives are currently determining Bitcoin’s price.
synthesis $BTC The exposure could dilute Bitcoin’s scarcity and move price discovery away from the spot market.
As the liquidations pile up, questions are growing about how much control Wall Street currently has over Bitcoin’s movements.
Bitcoin briefly crashed to $60,000 on February 6th, with over $2.6 billion in leveraged positions wiped out in 24 hours. This was the worst single-day decline since FTX’s collapse in November 2022. Most media outlets blame macro pressures and weak sentiment.
However, DeFi researcher CryptoNobler says the real problem is structural, and it has been building for months.
According to CryptoNobler, Bitcoin is no longer traded like a supply and demand asset. Derivatives have completely taken over price discovery.
“The moment supply starts being created synthetically, scarcity goes away. And once scarcity goes away, prices stop being discovered on-chain and start being set in derivatives.” he stated.
What happened to Bitcoin’s 21 million hard cap?
Hard caps still exist on the chain. But Bitcoin’s original value proposition relied on two things: fixed supply and no rehypothecation.
The moment Wall Street piled on physically settled futures, perpetual swaps, options, ETFs, prime broker loans, and wrap deals, that framework collapsed. $BTCand a total return swap on the chain.
PortfolioXpert creator and technical analyst Bob Kendall supports the same argument.
“Assets cease to be scarce when supply can be manufactured synthetically, and when scarcity disappears, prices become a derivatives game rather than a market of supply and demand.” he said.
6 layers $BTC problem
CryptoNobler pointed to what he calls the synthetic float ratio (SFR). The idea is simple. There’s really only one. $BTC You can now simultaneously back ETF stocks, futures contracts, perpetual swaps, option deltas, broker loans, and structured notes. All at the same time.
“This means there are six claims on one coin. That’s not a free market. It’s a fractional reserve pricing system wearing the mask of Bitcoin.” he warned.
He added that this is the same structural collapse that has already happened to gold, silver, oil and stocks after derivatives took over these markets.
wall street strategy
Both researchers described an endless cycle of producing papers. $BTCgo short, rebound, force a liquidation, cover at a lower price, and repeat. CryptoNobler calls this “inventory manufacturing.”
Today’s crash fits that pattern. Of the $2.6 billion in liquidations, more than $2.1 billion came from liquidated long positions. Although spot trading remained relatively calm, derivatives markets led the decline.
What does this mean for Bitcoin holders?
Bitcoin is trading around $66,000 after rebounding from the $60,000 low.
The question is how long this cycle will last before the market catches up.
