A top analyst believes that ‘paper Bitcoin’ is driving the current market decline of the leading cryptocurrency. Crypto Rover argues that Bitcoin’s price movement no longer depends solely on physical ownership but on a new financial layer built on top of the blockchain.
This ‘parallel financial layer’ includes derivatives markets, options contracts, and other instruments that create synthetic exposure to Bitcoin’s price. According to Rover, these instruments have become more influential than actual coin ownership, leading to a shift in how prices are discovered.
Rover explains that as derivatives trading volumes surpassed spot market activity, Bitcoin’s price stopped responding mainly to on-chain coin movement. Instead, prices reflect leverage, trader positioning, margin stress, and liquidation dynamics.
The analyst notes that synthetic supply allows one Bitcoin to be used across multiple financial products, increasing tradable exposure linked to the same coin without increasing its actual supply. This phenomenon, known as synthetic float expansion, weakens market perception of scarcity and changes how prices behave.
Rover emphasizes that Bitcoin’s hard cap has not changed at the protocol level, but the financial structure surrounding it has. He concludes that ‘paper Bitcoin’ is now more influential than physical ownership, driving market instability.
Source: https://www.tradingview.com/news/newsbtc:71a600354094b:0-top-analyst-says-paper-bitcoin-is-driving-the-market-not-the-21-million-supply-cap