Futures contract and general Review of the Crypto Market
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Hello everyone,
Today we will talk about Futures Contract and how they can affect the Crypto market. we will add an update for a trading company that enters the Crypto market and intends to give a fight to Coinbase and we will finish with the currency rankings published recently.
Futures Contract
So before we start with the news, a brief and general explanation of what a future contract is. A future contract is a contract that is created at a certain point in time and guarantees a future sale of a product/value, or in our case, Bitcoin at the market price at the time the contract was created.
For example, I have one Bitcoin that worth currently 10$, on Sunday. on that day I create a future contract in which I promise to sell my Bitcoin to John on Tuesday for 10$. Therefore, if the Bitcoin value increased significantly to 100$ on Tuesday, John earned 90$ because I promised to sell him my Bitcoin on Tuesday for 10$. If the value drops to one dollar, I earn because John is obliged to buy from me for 10$, although the current value of Bitcoin is one dollar. It's a bit complicated, but even if you do not get it, keep reading.
On December 11, the CBEO (Chicago Board option exchange) created the first futures contract for trading in Bitcoin. The value of the coating was around $ 17,000 when the contract was created. Now here it begins to be interesting, the contract realization date is 17.1.18 In other words, on 17 January the parties that created the contract make the promised sale and purchase. Therefore, the buyer wants the value of the Bitcoin to be greater than 17,000$ and the seller wants the value of the Bitcoin to be as low as possible (On the date of realization of the contract).
January 17 is the same day that the market fell almost by tens of percent, apparently following the statements of South Korea. If we look at the graph we can see that the fall began on 17 January in a destructive way and ended at the close of the contract, after which began a significant increase in the market. Coincidence? Maybe.
We understand why the seller would want the Bitcoin value to be low when the contract expires but how can it affect it?
What is being done is that whales with a large amount of Bitcoin who signed the futures contract can sell a large quantity of Bitcoin a few hours before the contract expires and thus cause the downfall and earn a lot of money from the process. Immediately after the expiration of the futures contracts they buy back the Bitcoin they sold and 'surf the waves' of recovery of the market.
On another subject, there is also good news, the Robinhood Trading Company, announced that it would make an entrance into the Crypto world. This news predicts a bright future for the Crypto market since the company allows for no-fee trading! Yes .. Yes .. 0% Commission. The company will add the first 100 coins in the rating of the Coinmarketcap gradually
Another rating that might be of interest to the crypto enthusiasts came out last week when the US investment company Weiss published a rating of 74 coins, of which only 5 received the score "B", the highest score on the list. Link to the full Rating
The five coins that received the B score are Etherium, Cardano, NEO, Steem, and EOS
However, Bitcoin received C + and Ripple received C. After ranking a lot of anger was directed towards Weiss. Since many experts argue that the reasons for the ratings provided by Weiss are Inadequate. The biggest winner of this rating is Daniel Larimer, one of the founders of EOS, who is also the founder of Steemit, making him the founder of two of the top five companies in the rankings.
You can see that there is a lot of impact on the market from future contracts to financial ratings across the network. But even among all the news and secrets that emerge, you can see that other trading companies are betting on this market and understand its potential. There are still lots of question marks that hover over digital coins and are not sure we will see answers in the next few days or weeks but as time passes you can see the fog scatter and everything slowly becomes clear.
So far for now. Have an amazing Day
Check out our last Post: Fun Currency - The world's Fastest Ethereum Casino Platform - Weekly Review of Cryptocurrency
@KingDavidHarp
On the futures subject, i don't believe that we already have a "tail wagging the dog" situation as lets say Gold futures influence the Gold price, the trading volume is just not there compares to the underlying asset (btc) but what we might have is a sens of appeal to authority , small mostly newbish investors believe that "wall street knows better" and give to much weight to the price action of the futures, but even then we pay close attention to the futures on a discord server i am a part off, and it mostly seem that the futures follow the market's price and not the other way around.
On January 17 the fall just ended when the future contract was over, I don't believe in coincidence.
I'd love to hear more about the server at Discord I'll talk to you there.
Yea, i see what you mean, but correlation does not automatically become causation.
a wise review of crypto market
Enjoying your posts! Interesting info regarding Robinhood. Also the list by Weiss is interesting.
Glad to hear :) We will continue to do our best.
As for Vertcoin maybe tomorrow I will check more on him. Thanks
@kingdavidharp
One of my favorite topics in crypto right now is Vertbase. It still feels like it is in the ream of obscurity but very real possibilities. Hope that people like you will spend sometime analyzing as well. It's good to have eyes on these new developments. https://steemit.com/cryptocurrency/@williamgabriel/2zndqc-vertcoin-undervalued
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