Futures are coming: Two key Questions?
Bitcoin futures are coming, really soon, like in 5 days.
Overall this is a great thing for bitcoin and crypto currency. Any sort of market exposure is good overall I think.
There are two question in my mind at this time:
How can I get in?
Would it not be nice to be able to use futures to bet on the market and in particular to be able to hedge against bubbles. So one thing I am wondering is how I could actually take part in this. Is this something I can do with my regular trading account? I have no clue and would love to learn how I as average joe investor can buy these futures.
How will this affect the real market
Futures will be traded outside of bitcoin/crypto market. They are settled in cash, which means they are simply bets outside of the actual crypto exchange market. It's kinda like making a bet on a sports game. They should technically not affect the game.
One of the worries here is that large flow of value can be made without buying the asset. This somewhat distorts the market. I.e. If someone were to buy 1000 BTC in the real market this would sure change the price, but what if those same 1000 btc are wagered via the future: The supply of btc does not change a bit.
I am cautiously optimistic
I think it is great that more money can now bet on bitcoin, however I am worried how this will distort the market. I hope overall this will just bring more institutional and speculative money into the space. We will see what the future holds.
Let's be aware that there are some smart folks that are only looking to short this and when the next crash is coming this could push the price even down further.
Big Fish?
I wonder how the big players will react when they made a big bet on the market but land on the opposite side or want to push the market their way? This could potentially lead to players that are in the market to buy futures and futures speculators to be active in the direct market.
What are you thoughts. I'd be interested to learn your insights.
Futures tend to be a highly leveraged investment. They are normally settled in cash but there are some people who actually do hold them to term and take delivery of the asset. While they might have a somewhat complex name, a future is just basically a contract to buy or sell something at a certain price by a certain date.
In theory, they shouldn't affect the spot price of BTC. However, the price of BTC might be affected a bit to prevent people from making arbitrage profits between the spread between the futures price and spot price (current price) of BTC.
How does a contract get created. Do we need a seller and buyer to create a contract? Who issues the contract?
a very good question
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I actually don´t think they´ll really affect our market. Banks are blocking them now already and they are all just cash settled, so no real ties to BTC. It´s just to make people gamble on it a bit.
I assume that the direction for the financial industry is to get Bitcoin to a stable pricing, so it can be used as money. The block chain technology is amazing and the financial industry wants to make use of it. - However, I do not know how futures trading could help with that goal in mind