Because there’s no reason why it couldn’t. And that’s the problem. Unlike any other market in the world, there are no natural sellers in bitcoin. Even the miners who mint coin stockpile as much of it as possible and try to obtain as much free energy from alternative non monetary sources. Walter Zimmermann, technical analyst at ICAP Technical Analysis, has been in the commodities and futures market for more than 35 years. In that time, he says, he’s never seen a market quite like it. He’s worried the launch of bitcoin futures next will only exacerbate the one-directional trading. And since bitcoin has no fundamental value that takes the next technical target point to as far as $47,400.
If and when they are forced to sell to pay for electricity bills they do so through established bilateral OTC channels out of fear that dumping huge amounts of coin on public exchanges could impact upward momentum, eating into their potential gains. The closest thing he’s seen that’s comparable, he says, is the Cinergy and Entergy electricity contract launched by Nymex in 1998. Due to regulatory reasons it too had no natural sellers in the market on a structural basis, says Zimmermann. This prevented any proper market making in the contract. The history is telling. Brokers, unable to offset flows naturally in the market, began to step out. They had no incentive to keep supporting the contract. The result: thin trade and little to no liquidity.