Topic: Bitcoin price discovery

More and more #bitcoin is taken off exchanges, but nonetheless the crab market continues to keep poking bitcoiners in the eye.

I asked Grok:

"If we ignore bitcoin futures trading, is it possible that trading of "paper bitcoin" on crypto exchanges has such volume that it affects the bitcoin spot price?"

Grok's conclusive remarks were:

"The sentiment from posts on X and broader market analysis suggests that while spot ETFs and direct ownership of Bitcoin are significant, the derivatives market's volume and its impact on price cannot be understated. This indicates that even without considering futures, the trading volume of what might be colloquially termed "paper Bitcoin" on crypto exchanges could indeed affect the Bitcoin spot price through mechanisms like sentiment, arbitrage, and leveraged trading. However, the exact extent of this influence would require detailed market data analysis beyond what's typically available in public discussions or general insights from X posts."

Comments?

Excluding futures, can trading of "paper bitcoin" negatively affect bitcoin price discovery in theory or practice?