Wealth gap widens in crypto as big players dominate bitcoin market, leaving individual investors in the shadows.

Renowned economist Fu Peng, recently appointed as the chief economist at Xinhuo Group, a firm noted for its in-depth cryptocurrency market evaluations, has presented a compelling examination of the underlying mechanisms driving Bitcoin's value. Through a series of statements on the X platform, Fu Peng observed that the cryptocurrency's market structure is becoming increasingly analogous to traditional financial markets, particularly in the realms of futures and exchange-traded funds (ETFs). He noted that the principles governing Bitcoin's perpetual contracts and ETFs bear a striking resemblance to the "carrying cost" and "overnight fee" systems commonly found in the markets for gold and industrial commodities. This similarity suggests a paradigm in which institutional investors can generate consistent revenue by maintaining long positions, thereby contributing to market stability. A key aspect of this model is the funding fees paid by retail investors for leveraged transactions, which emerge as a primary source of income for the system as a whole.

Fu Peng's analysis also sheds light on the strategies employed by large-scale spot investors, revealing that they do not merely adopt traditional long positions in anticipation of price appreciations. Rather, these investors employ a more nuanced approach, akin to that of a "householder," who safeguards their long-term positions while accumulating funding income through hedging strategies. By doing so, these large investors can reduce the costs associated with their positions over time, and under specific conditions, even achieve "zero cost" or "negative cost" levels. Contrary to the prevalent market perception that large investors are primarily shorting the market, Fu Peng argues that their true role is that of "rent collectors," who consistently earn revenue from the market. The premium and discount structures observed in CME Bitcoin futures are said to reflect these complex dynamics of cost and return.