Bitcoin keeps standing on the verge of tremendous changes that will affect the whole crypto industry. On December 10, the Bitcoin futures were launched on CBOE (Chicago Board Options Exchange), and on CME (Chicago Mercantile Exchange) on December 18. Futures trading enables institutional investors to bet for or hedge against the Bitcoin rates. However, the future of the largest cryptocurrency in the world remains unpredictable since its rate keeps swinging. In these historic times, we would like to tell you about what’s going on in quite simple words.
What actually are the futures?
This paragraph is special for all those are not well accustomed to trading basics but want to look into what’s going on. Let’s imagine you produce wheat. So you conclude a contract with a brewer according to which you sell him or her your wheat at a fixed price within a fixed period of time in future. This contract protects your next season harvest from price dropping and guarantees your buyer the contract fulfillment regardless of current circumstances on the market. Likewise, Bitcoin futures will determine the crypto rate behavior in short and long terms. This will help make Bitcoin less volatile and more appealing for mass adoption. Once futures contract is concluded, it can be bought or sold on the market allowing to bet on the price of futures. Note that this is not trading on cryptocurrency exchanges. You cannot do it anonymously.
Up or down?
There are two controversial forecasts about Bitcoin price behavior after futures trading is launched. Some analysts consider Bitcoin overestimated and predict its crashing. On the other hand, there is plenty of facts arguing for the subsequent soaring.
Bubble theory vs. Wall Street bulls
Is Bitcoin a bubble which will burst? Some market specialists and governors admit that don’t even know how to valuate Bitcoin, ince the coin is not linked to any shares or property, it is not governed by anyone and rather indicates speculation. Especially, considering the fact that CBOE bases initial rates strictly on Gemini, a cryptocurrency exchange of Winklevoss twins. Without these fundamentals, as supposed, the Bitcoin rate is more likely to dramatically drop, once the futures are rolled out.
Contrary, the Wall Street bulls are more optimistic. They see Bitcoin as a revolutionary payment method that will change the whole monetary system, just like Airbnb, Uber and other disruptive innovators. In fact, Bitcoin’s adoption is already growing by becoming a payment method in a range of countries, such as Japan. It’s good to remember that Bitcoin is a pioneer blockchain-based currency. The technology gained mass interest since it made middlemen totally useless for transferring funds.
To trade or not to trade?
That is the question to your personal beliefs rather than rough analytics. Currently, the rate keeps rising, buy yet nobody can predict what is going to happen to Bitcoin or Bitcoin futures tomorrow. Still, the situation is unclear, as institutional investors are likely playing the waiting game, so far. Some trading companies admit that the Bitcoin rate will keep growing for a while and then start depending on players on the market.