Options and derivative products will help Bitcoin's market capitalization reach 10 trillion dollars.

Derivative products, such as options contracts — financial instruments that allow investors the right, but not the obligation, to buy or sell an asset at a predetermined price — are predicted to push Bitcoin's market capitalization to at least $10 trillion, according to market analyst James Van Straten.

Van Straten believes that options and other derivative products are attracting the interest of institutional investors, while also helping the market mitigate high volatility, which is a prominent feature of digital assets.

He pointed out that open contracts for Bitcoin futures on the Chicago Mercantile Exchange (CME), the largest derivatives market in the world, are evidence of this transformation. Van Straten wrote:

"The open interest of CME options contracts is currently at a record high, partly due to systematic volatility selling strategies such as covered calls. This indicates that the market structure has become more mature with deeper derivative liquidity around Bitcoin."

The reduction of volatility has an impact in both directions, and the sharp declines often seen in the cryptocurrency market will also lessen the explosive profits that investors are accustomed to, Van Straten added.

Market analysts are still debating the impact of financial derivative products and investment vehicles on the Bitcoin market cycle as well as the broader cryptocurrency market. Some argue that all signs point to the maturity of the market, while others assert that investor sentiment is the main driving factor behind market movements.

Does the four-year market cycle still exist?

Analysts remain divided on the impact of institutional investors, investment vehicles, and financial derivative products on the cryptocurrency market.

Seamus Rocca, CEO of the financial services company Xapo Bank, shared that the four-year market cycle of Bitcoin has not yet ended, and the market will continue to be influenced by news cycles, crowd psychology, and investor sentiment.

"Many people are saying, 'Oh, institutions have gotten involved, and therefore, the cyclical nature of Bitcoin is dead.' I do not entirely agree with that view," Rocca said.

Matthew Kratter, a market analyst and Bitcoin advocate, emphasizes that human psychology is truly the key factor driving the market, arguing that institutional investors also make irrational decisions similar to retail investors.

"The Bitcoin bear market from 2021 to 2022 was primarily due to institutional investors making poor decisions at companies like Grayscale, Genesis, Three Arrows Capital, and FTX," Kratter added.

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