What is paper Bitcoin and how does it influence price?

Over the past decade, Bitcoin has undergone a remarkable transformation. What began as a relatively straightforward spot market asset, primarily traded by individual enthusiasts, has matured into a sophisticated financial instrument. This maturation has been marked by the introduction of derivatives, increased participation from institutional investors, and the launch of Bitcoin-focused Exchange Traded Funds (ETFs).

As these elements have become integral to the Bitcoin market, understanding their intricate interplay has become essential for understanding the market.

Among the many facets of this evolved market, the concept of “paper Bitcoin” has recently emerged as a focal point of discussion. This term, which refers to Bitcoin derivatives that don’t involve the direct ownership of the cryptocurrency, has piqued the curiosity of many. Analysts are actively debating its actual impact on Bitcoin’s price, with some arguing for its significant influence and others downplaying its role.

In this report, CryptoSlate will dive deep into the notions of paper Bitcoin and liquid supply, shedding light on their relationship and the broader implications for the Bitcoin market.