Bitcoin. Futures. When?
What are the Futures?
In simple terms, they are contracts that obligate the buyer to purchase an asset or the seller to sell an asset such as a physical commodity or a financial instrument. The main idea is that the price and date are predetermined. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash.
Bitcoin is about to enter the Futures market. Why is it so important?
First, it will be a lot easier to perform transactions using Bitcoin. The CME Group, largest Chicago exchange, has announced its plans to launch futures for Bitcoin. More importantly, it will offer to large institutions, such as banks and hedge funds, a fast and standardized way of doing business in the market.
How will the Futures market change Bitcoin?
Futures contracts are regulated by The Commodity Futures Trading Commission (CFTC). Thus, Bitcoin trading, which is currently taking place on dozens of unregulated exchanges around the world, will be relatively legal.
What are the biggest risks associated with Futures?
The main problem is leverage. This means that theoretically, you can buy Bitcoins worth $ 10,000 for only $ 1000. The rest is a loan, so the rates go up. If the investment of $ 10,000 grows only by $ 1000, then you double your money. If, on the contrary, it falls by $ 1000, then you will lose everything. Futures pose a danger to newcomers - especially in the market of such volatile and untested currency as Bitcoin.
Latest news about Bitcoin and Futures
Wall Street Journal: Nasdaq exchange will start trading Bitcoin futures
The largest US stock exchange will start trading Bitcoin futures. According to the Wall Street Journal, this will happen in the second quarter of next year. Nasdaq contracts will start trading in the NFX market, and their price will be determined based on the study of more than 50 different sources. In the case of hard forks, Nasdaq plans to sell the resulting forks and reinvest the profits in the original bitcoin.
Later, The CEO the Nasdaq, Aden Friedman, stated that the launch of futures on Bitcoin is still under discussion.
The Central Bank of Russia banned the Moscow Stock Exchange from trading Bitcoin futures
The Moscow stock exchange will not be able to launch such tools until Bitcoin and other cryptocurrencies are regulated at the legislative level. The fact that the Moscow stock exchange wants to start trading Bitcoin futures became known in September. As for now, the CB announced that it will not issue the license that will allow the Moscow Stock Exchange to trade Bitcoin futures.
Why else is in the "race" for Futures?
The CME Group made announcements to launch cryptocurrency derivatives in December. The Chicago Board Options Exchange (CBOE) in partnership with the New York Gemini Exchange are about to launch futures for cryptocurrencies as well. Vontobel, a Swiss bank, and the Leonteq Securities AG have announced the launch of mini-futures.
Who is going to be the first in this "race"?