CBOE and CME first future contracts settle this month, how this could affect the market

kevinbacon (53)in #bitcoin • 6 years ago

The first CBOE future settles on the 17th and the CME future settles the next day on the 18th.

I'd like to give my thoughts on why this may cause a bull run in the medium term. But would love to hear feedback and thoughts on how you think it will, or won't, affect the price of bitcoin.

The Bull Case

Of the trillions of dollars under management by the big banks and funds none of it is currently invested in crypto. While it is likely a lot of smaller funds and family offices have an allocation, all the big boys have said that they do not offer crypto.

I think this will change and change soon. The reason? When most managers are asked about it, on bloomberg or cnbc, they say that they do receive calls about crypto but they just have to tell them they can't allocate any funds to it.

All businesses will give their customers what they want, or they don't stay in business long. And I believe the reason they haven't given there customers a crypto fund yet, is the difficulties in storing.

The banks are terrified of holding your bitcoins, how do they insurce them against theft, insurance companies have nothing to base the risk on, so they likely won't touch it.

That's where the future contracts come in. Finally this is a bitcoin product they can buy. It is insured and offered by 2 respectable exchanges.

I foresee the banks beginning to offer the customers that call, to allocate a proportion of their funds to these futures. They will still be cautious and advise small amounts, <5%, but it would cause a lot of buying pressure.

So why aren't they doing it? The futures have been live nearly a month now, and the volume has not been great.

Banks hate to be first, first is scary, the first is the one that gets burned or in trouble. They like to be early, just not too early. They will want to see how the first future contracts go, start to finish.

So when the settlement dates come and pass without any problems (hopefully), I expect the banks will start to allocate more and more funds to them.

My plan

It's pretty simple I will be looking closely at the volumes on both the CBOE and CME's contracts, and if I see the increase I expect I will start increasing my bitcoin position.

Thanks for reading.

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If you like this post there will be more like it on my posts page, this account will be dedicated to posting about trading cryptocurrencies and maybe a bit of general stock markets.

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Disclaimer

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