The emergence of a robust, regulated derivatives market, facilitated by CME Group Bitcoin futures and options, marks a fundamental shift in the narrative surrounding the halving for three key reasons: it enables price risks to be hedged, facilitates the management of bitcoin demand risk and provides market participants with actionable price discovery.
Miners typically sold their bitcoin for fiat currency as they mined them, often to pay for operational costs. This constant selling meant that price appreciation was measured. After a halving event, miners would have fewer bitcoin to sell, meaning the price could go up.
Mining is now dominated by larger, often publicly traded, companies. With a liquid, regulated derivatives market, it is possible for these firms to hedge and lock in future bitcoin prices without selling their coins. If this is the case, then selling pressure from miners is less likely to act as a drag on bitcoin prices going forward. CME Group Bitcoin futures average daily open interest rose to $11 billion (+29,000 contracts) in March, indicating growing interest for bitcoin exposure.
