Bitcoin futures countdown!
It's coming.
Bitcoin futures will be launching very soon - Sunday, December 10, at 6:00 pm Eastern time. Bitcoin futures will be traded under the ticker symbol XBT.
The market is in a slowed holding pattern today with Bitcoin prices slipping moderately. For those new to the cryptocurrency game, it should be noted that this "correction" is minimal - more turbulence could occur as opening time approaches.
Having said that, one could argue that Bitcoin futures ought to have little to no impact on the actual price of Bitcoin, since the futures are settled in USD, not in Bitcoin. In other words, they have no direct impact on the supply and demand of Bitcoin itself and are merely a "side-bet" with no direct causal effect.
But markets are often affected by sentiment. It is true that futures have no direct bearing on the price of Bitcoin, but if it is perceived that the majority of futures traders are going long, the price ought to increase on buyer confidence. Conversely, if the futures market leans toward short-selling, traders may become fearful and take their profits in anticipation of a large crash.
Right now, it appears that Bitcoin is in a wait-and-see mode, but it is likely that more dramatic activity will occur before opening time tomorrow night. It's possible, however, that the real fireworks might not take place until after futures launch.
source:
https://www.etftrends.com
I think this is disgraceful. Future markets should be banned. Just gambling on gambling. I really hope people protest this my not using such instruments.
what is a bitcoin future?
A Bitcoin future is basically a bet. You bet on the price of Bitcoin in the future. You can bet that prices will go up or down. If you're right, you gain money. If you're wrong, you lose money.
I know this is an over-simplification, but that's basically what it is. Most futures pay out in whatever you are betting on. Bitcoin futures pay out in USD. So, they do not affect the supply and demand of Bitcoin. It's purely speculative.
I have written a post about what a futures contract is: https://steemit.com/bitcoin/@datascience/introduction-to-bitcoin-futures
followed and upvoted --i am holding and looking to buy on a significant dip if one happens
This is a decent dip right now!
Futures and spot markets, in the absence of carrying costs and cashflow from underlying, should in principle be mathematically related by this formula: futures price=current spot price of underlying x (1+risk free rate)^tenor. Arbitrage activities should take place based on this mathematical relation.
However in the crypto market which is largely unregulated now, we think compliance issues make it difficult for these new institutional monies to enter the spot market. This mean the usual arbitrage activities cannot take place and therefore spot prices are likely to move independently from futures prices. As you rightly pointed out, sentiments could be a link between the 2 markets.
This is my analysis on the impact of BTC futures summarised into 5 points. Like to hear your views.