Bitcoin futures don't (directly) affect Bitcoin price

[jaysabi]

Now that CBOE and CME are trading Bitcoin futures, there was hope it would push the price of Bitcoin higher. There is, however, no direct link between the futures being traded and the Bitcoin price. The reason for this is Bitcoin futures are cash settled. There is never a point where the expiration of a contract will ever involve the exchange of Bitcoin, so the trading of futures is an artificial tracking of the Bitcoin, just in a more regulated setting. This may give institutional investors more confidence than dealing with unregulated crypto exchanges, but it doesn't mean anything for the price of Bitcoin (directly).

It remains to be seen if Bitcoin futures can indirectly affect the price of Bitcoin. Because there is no settlement in Bitcoin, futures contracts cannot affect supply for sale and demand directly, but if futures traders bid the one-month futures settlement price up $5,000 above the Bitcoin price, it remains to be seen if this will translate into increased confidence for the actual Bitcoin market and lead people to buy more and also push the price up. This is the only way futures can affect the price, indirectly.

My expectation is that because there is no settlement in Bitcoin and settlement has no direct ability to influence price, the futures will not trade wildly differently from the actual price at any given time, and any indirect affect will be negligible. With the volatility of Bitcoin, futures traders will never be able to speculate too far ahead of the actual price because of the speed at which the price can change and leave them on the hook for settlement of an asset they won't even be able to take control of if they bet wrong, but must simply settle in cash for a loss.

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[gentlemand]

It's a vast incentive for them to get in on the Bitcoin market directly. I assume they can't get on to most exchanges but GDAx, Itbit and Gemini must be possible. I can't see Wall St sitting back and letting Bitcoin trading scum wag their dog.

[jseverson]

There is one indirect effect I could think of. Futures trading certainly adds legitimacy to Bitcoin as an investment. I don't know for sure if it's at all connected, but didn't the mempool congestion start around a week ago, when everyone has been anticipating the start of futures trading? That could also signify that more people are getting into Bitcoins than ever, which perfectly coincided with all these futures hype. I could be completely wrong, of course, because I'm really just speculating at this point. All I really know for sure is that Bitcoin's reputation is at its best with futures trading.

[ladydark]

Yes,it would not directly affect bitcoin price.It would exist as gold futures,oil futures,etc.Bitcoin futures would have a positive impact on investors mind which would help bitcoin price rise more.But the main thing is that bitcoin futures has brought even institutional investors in to the bitcoin market. But what is the interesting aspect is that the sealing rate has been kept as $20,000 and so,price manipulation could not be done more.

[davis196]

I thought that most of the players on the bitcoin futures market will have to trade on the bitcoin market to close their positions and get short-term profits.When the current btc market price is higher than the fixed btc price in the futures contract,the trader would execute the futures contract and use the money to buy bitcoins.Anyway,the futures market would need bitcoin settlement.

[lifetimebitcoins]

But we don't when the price of Bitcoin will get settled at one point but once future bidding in CBOE and CME are high, then it will automatically reach to that position, so how far we can expect the growth of this Bitcoin.

[fiulpro]

Well I think everyone is fully aware of this fact also !

You cannot deal with this many transactions and this slow Bitcoins network...

I don't Think its possible to deal with this...thus its really the only possible thing that they can do...also...! The money they are dealing with is enormous.. and for the smallest transactions it takes this much time so... Going for dealing with 5 bitcoins per person..and... Buying and selling through it will for sure degrade the interest of others..

[jaysabi]

There is one indirect effect I could think of. Futures trading certainly adds legitimacy to Bitcoin as an investment. I don't know for sure if it's at all connected, but didn't the mempool congestion start around a week ago, when everyone has been anticipating the start of futures trading? That could also signify that more people are getting into Bitcoins than ever, which perfectly coincided with all these futures hype. I could be completely wrong, of course, because I'm really just speculating at this point. All I really know for sure is that Bitcoin's reputation is at its best with futures trading.

The mempool has been congested for the better part this entire year. I think you'd have to differentiate between congestion at 100k unconfirmed transactions (which it rarely ever seems to dip below now) and the most recent levels of 200k unconfirmed transactions. Either way, it's probably not very sound logic to infer causation between unconfirmed transaction level and the start of futures trading. The more likely explanation is the network remains under spam attack from people trying to artificially elevate the utility of Bitcoin Cash in comparison to Bitcoin.

[IndzheborgC]

My hope for futures contracts is that it will reduce the risks from the volatility of the bitcoin price. This can enable large financial institutions to use it in everyday practice. That in the end will lead to an increase in the price of bitcoins.