Dear follower or new joiner, I am really happy to welcome you today. It is Friday, and I have chosen a subject related to a specific investment technique. Don’t be afraid, I will explain it in very simple terms and you don’t need to be a financial professional.
The financial markets is an important pillar of the economy. In the current COVID-19 crisis, you can see that all sectors of the economy are impacted but the financial market after a big lose are flying again. Why? Because the central bank are offering lot of money in order to save companies. When central bank offer such money it increase the liquidity of the market and therefore it provides more food for the traders and they use it to make it rise again and again; ultimately creating major profit for them.
But how do they make money when it’s falling? One of the key instrument is called DERIVATIVE. A Derivative is a virtual products developed by financial institutions which allow to provide specific “features” such as:
- The price of the derivative product can rise when the underlying product fall. -e.g. When the underlying asset fall of 5%, the derivative production increase of 5%.
- The price of the derivative could apply leverage. -e.g. When the underlying asset increase of 2%, the derivative product increase of 10% (leverage of 5x).
Therefore traders can buy derivative to AMPLIFY the asset movements and to win when it RISE or it FALL.
You may say that there is much more around derivatives and you are right but it is not the purpose of the article to enter into the details.
Since a few years, derivative products have been introduced on the BITCOIN market. Yes you hear me. You know that BITCOIN has been created in order to provide an alternative to the traditional markets governed by sovereign countries and financial institutions. But time after time the same CRAP FINANCIAL INSTRUMENTS are implemented on BITCOIN services and exchanges.
Today, you can buy BITCOIN derivative products and win money when the BITCOIN price fall. When you do that, in parallel you increase the selling pressure and it amplify the fall. Until now the BITCOIN market is mostly made of private people; the big companies are not yet buying BITCOIN. When they start, they will start to use all those derivative products to manipulate the market and make profits just as they do on the normal financial system.
This rally is different than last time, Sonnenshein argues, because “we are in a very different market than we were in 2017.” The cryptocurrency investing ecosystem has matured with derivatives, options, and borrowing, making it “way more of a two-sided market.”
Sonnenshein – Grayscale Capital
The good news is that the SMALL CAP such as FEATHERCOIN are not on the derivative market. In other words, the FEATHERCOIN market is more CLEAN than the BITCOIN market as you can only sell FTC that you own or buy FTC offered by other.
The purpose of the decentralized exchange initiatives is also to escape from all these “traditional instruments” implemented over BITCOIN.
So if you want freedom and create a true decentralized monetary system belonging to the people…YES I want that!
Stay with us, join our community and spread the news to your friends and family.
Your friend,
Feathercoin Writer
