Bitcoin (BTC) has experienced a retreat from its recent price peaks, sparking debate among market participants about the underlying reasons. While some observers attribute the pullback to persistent narratives like the cryptocurrency’s traditional four-year cycle or various technical irregularities, others see a more fundamental challenge impacting Bitcoin’s inherent valuation mechanics.
Bob Kendall, a seasoned technical analyst, offers an incisive perspective on the matter. He asserts that Bitcoin’s valuation is no longer governed solely by its on-chain scarcity or the well-known upper limit of 21 million coins. Instead, the ecosystem surrounding Bitcoin has evolved to the point where its pricing dynamics incorporate an expansive set of financial layers.
According to Kendall, derivative financial instruments—namely futures contracts, perpetual swaps, options, exchange-traded funds (ETFs), lending products, tokenized versions of Bitcoin (such as wrapped BTC), and swaps—have collectively contributed to Bitcoin’s effective supply exceeding its physical cap. This phenomenon allows for a synthetic expansion of Bitcoin’s availability within the market context. He draws an analogy to commodities like gold or oil, noting that in markets rich with derivatives, price movements often reflect the behavior of synthetic or paper assets, rather than tangible holdings.
Kendall elaborates that this shift means price determination is increasingly controlled by the most recent buyer and the synthetic supply floating in the market, rather than by the actual quantity of physical Bitcoins. This creates conditions where significant market actors can manufacture