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Author Topic: BitCoin Futures  (Read 511 times)
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December 04, 2017, 04:05:58 PM
 #1

just some random thoughts ....
Bitcoin futures are set to go live on CME (Chicago Mercantile Exchange) on Dec 18, 2017. How will this affect Bitcoin?

Lets start with the basic idea of a futures contract to for context. If a company wants to build lets say a bridge that will take 3 years, they need to know their cost of materials in order to finance the project. Since steel prices can change, futures provide a way to contract for future delivery of steel at a set price, so even if the market price of steel changes, their costs do not.

There is a key point here to keep in mind. This is a contract for future delivery of material, but futures have morphed into a speculative derivative that allows for never taking delivery and simply trading the contract for more or less than you paid for it based on the market price of the product, and I believe many markets have grown into selling contracts where delivery is not even possible. More future delivery contacts are written than can physically be delivered, so it's a pure speculative derivative. I assume the contracts include a clause that allows them to be settled in dollars rather than the actual material. Bitcoin futures would have to have such a clause as few coins cold actually be delivered.

There are those that believe the price of gold and silver are held artificially low by the futures market. I have not looked into this closely enough to have an opinion, but in theory, why would some one pay $5000 an ounce for physical gold if they can buy a contract for it at $2000/ounce?  The same mechanism could come into play with Bitcoin. Conspiracy theorist might say this is the banks getting control over the bitcoin value without having to even get into the game.

But there are other ways it could play out. If bitcoin keeps increasing in value, people writing futures contracts (Sellers) would lose their shirt selling contracts too low, so they would have to raise their price which further supports the market price of bitcoin and may even drive it up.

And, if the contracts do not include a clause to settle in cash, demanding actual delivery on contracts could cause quite a rush of purchasing to fulfill contracts which could drive the price insanely high.

And what would happen if a large number of contracts that are not fulfillable are written and buyers demand delivery? Could it break the futures market? (I doubt they would create contracts that could accomplish this).

So how do you see this playing out?
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December 05, 2017, 03:34:30 AM
 #2

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But there are other ways it could play out. If bitcoin keeps increasing in value, people writing futures contracts (Sellers) would lose their shirt selling contracts too low, so they would have to raise their price which further supports the market price of bitcoin and may even drive it up.


I am more optimistic that this is the scenario that can come true with Bitcoin. We have to understand that Bitcoin is really different in many aspects when compared to traditional investment vehicles like stocks, gold, forex and other derivatives. If am not mistaken, the coming Bitcoin futures contracts can be categorized under derivatives.

Aside from the futures markets, there are also other big factors that can push Bitcoin to the stratosphere and it is primarily the demand for it and by next year we are hoping that Bitcoin can expand more in new countries that will recognized it legally. Yes, it is quite possible that futures can somehow affect the market but for the next few months I don't think it mean in a negative way. But then again, only time can tell what can really be.
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December 05, 2017, 07:09:06 AM
Last edit: December 16, 2017, 06:37:32 AM by lili song
 #3

I'm sure bitcoin have a future ! For example : Japanese can't be too stupid to accept bitcoin as legal transaction for their own country.
It must be advantage for bitcoin compare with other type of payment
So just keep believe on bitcoin and keep invest it as long as possible !

just some random thoughts ....
Bitcoin futures are set to go live on CME (Chicago Mercantile Exchange) on Dec 18, 2017. How will this affect Bitcoin?

...

So how do you see this playing out?
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December 05, 2017, 10:55:09 AM
 #4

Of course, the launch of Bitcoin Futures should affect the price of Bitcoin by increasing volatility but ultimately improving pricing efficiency and accuracy.However, Bitcoin futures were already widely traded in the market since OKCoin. The pricing efficiency may become even better as a result of Bitcoin derivatives. However, more volatility is expected.Also, this is only one of the many, many factors affecting Bitcoin price.
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January 25, 2018, 05:17:24 AM
 #5

Bitcoin is going to rule the share market in upcoming days because most of the investers are turned their eyes towards BTC to lead their business in a profit way...
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January 25, 2018, 11:29:47 PM
 #6

This is just the start of the bitcoin phenomenon, I know there are more investors that will come and more traders as well. Lets not be pessimistic about  the future of bitcoin. More investors means more money.

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January 26, 2018, 06:22:49 AM
 #7

This is just the start of the bitcoin phenomenon, I know there are more investors that will come and more traders as well. Lets not be pessimistic about  the future of bitcoin. More investors means more money.

I agree, I am sure many investors will join and numbers of traders will increase. But with the flow of btc price we can say that btc is still unstable and hard for it to reach again its price ath before. I hope there will be incoming events that will make the price of btc rise again.

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May 02, 2018, 03:16:19 AM
 #8

bitcoin has a bright future, it will grow extremely strong in the next years
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May 02, 2018, 12:12:54 PM
 #9

just some random thoughts ....
Bitcoin futures are set to go live on CME (Chicago Mercantile Exchange) on Dec 18, 2017. How will this affect Bitcoin?

Lets start with the basic idea of a futures contract to for context. If a company wants to build lets say a bridge that will take 3 years, they need to know their cost of materials in order to finance the project. Since steel prices can change, futures provide a way to contract for future delivery of steel at a set price, so even if the market price of steel changes, their costs do not.

There is a key point here to keep in mind. This is a contract for future delivery of material, but futures have morphed into a speculative derivative that allows for never taking delivery and simply trading the contract for more or less than you paid for it based on the market price of the product, and I believe many markets have grown into selling contracts where delivery is not even possible. More future delivery contacts are written than can physically be delivered, so it's a pure speculative derivative. I assume the contracts include a clause that allows them to be settled in dollars rather than the actual material. Bitcoin futures would have to have such a clause as few coins cold actually be delivered.

There are those that believe the price of gold and silver are held artificially low by the futures market. I have not looked into this closely enough to have an opinion, but in theory, why would some one pay $5000 an ounce for physical gold if they can buy a contract for it at $2000/ounce?  The same mechanism could come into play with Bitcoin. Conspiracy theorist might say this is the banks getting control over the bitcoin value without having to even get into the game.

But there are other ways it could play out. If bitcoin keeps increasing in value, people writing futures contracts (Sellers) would lose their shirt selling contracts too low, so they would have to raise their price which further supports the market price of bitcoin and may even drive it up.

And, if the contracts do not include a clause to settle in cash, demanding actual delivery on contracts could cause quite a rush of purchasing to fulfill contracts which could drive the price insanely high.

And what would happen if a large number of contracts that are not fulfillable are written and buyers demand delivery? Could it break the futures market? (I doubt they would create contracts that could accomplish this).

So how do you see this playing out?
It has been a long time that bitcoin has a future to every one of us and i know that in physically needs we are really settled for our future and we all know that bitcoin will give us futures and who know that tomorrow we will be a millionaire through bitcoin.
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May 02, 2018, 12:36:51 PM
 #10

Bitcoin future i thought its great.
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May 02, 2018, 02:06:15 PM
 #11


There are those that believe the price of gold and silver are held artificially low by the futures market. I have not looked into this closely enough to have an opinion, but in theory, why would some one pay $5000 an ounce for physical gold if they can buy a contract for it at $2000/ounce?  The same mechanism could come into play with Bitcoin. Conspiracy theorist might say this is the banks getting control over the bitcoin value without having to even get into the game.

But there are other ways it could play out. If bitcoin keeps increasing in value, people writing futures contracts (Sellers) would lose their shirt selling contracts too low, so they would have to raise their price which further supports the market price of bitcoin and may even drive it up.

And, if the contracts do not include a clause to settle in cash, demanding actual delivery on contracts could cause quite a rush of purchasing to fulfill contracts which could drive the price insanely high.

And what would happen if a large number of contracts that are not fulfillable are written and buyers demand delivery? Could it break the futures market? (I doubt they would create contracts that could accomplish this).

So how do you see this playing out?

That's why setting contracts is never going to be intelligent, too much scamming in there.
Ok, let's see. If I have correctly understood, you are talking about selling contracts instead of bitcoin (for, as long as I can read you are talking just about bitcoin)? What do you exactly mean by that? People buy and sell BTC, yet there are many exchangers in which you don't really own the bitcoin, is that what you meant?

I can't see exactly your point, due to the misuse of the concept of crypto, I believe. Why should I buy a contract instead of a bitcoin by myself? Because of the lower price? But isn't it just a crystal-clear scam? Gold and silver are too different from the crypto world because those happen to be centralized.
Are you talking about loans? For instance, when I ask for a loan in order to buy a house? Do you think it is going to be possible to get a Bitcoin loan, as in a bank? Normally, if you settle a contract related to obtaining some material, this is going to be stipulated since the very beginning the prices of the material, and also the "normal" fluctuation they are going to suffer (more or less based on inflation and so, as a 2-5%). I don't think this is possible in bitcoin, at least for the moment, due to its volatility. Even when material prices can change, the loan you ask for when trying to build a business, for example, is a contract you get directly with banks. So you are responsible for making right your maths and for choosing correctly how much are you going to ask in order to fulfill your project. Regarding Bitcoin, you maybe can obtain a loan, but this is more probable you will seek for a loan in order to trade or invest, rather to a life-project.
For the moment at least, it seems difficult to set a long-term contract by usgin bitcoin, as a loan for a house or a bussines. Also if someone offers me a contract instead of a bitcoin I will say no, for it seems as a scam.

But maybe I don't fully get your point, if you can, explain further, for it seems truly interesting.

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May 03, 2018, 01:58:32 PM
 #12

I guess more and more investors will join every day.
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May 03, 2018, 06:51:31 PM
 #13

I'm sure in the future Bitcoin will be significantly improved. And the technology itself will go into our lives.

Did you really understand what's the topic is all about? The OP is talking about the Bitcoin future contracts offering by CME and CBoE and what's its effect on the market price.

Anyways, fast forward today and after the contracts has expired around February if I'm not mistaken, it didn't bring good effect on us long term. Its seems that when it was opened last December, people FOMO'd, pouring cash into the ecosystem that really pushed the price to almost $20K. However, we know what happens next, the bubble has been burst and price plummeted to as low at $6500. So we can say that it only brings more harm than good to all of us so it didn't play out as what everyone thought would be.

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May 03, 2018, 10:16:31 PM
Merited by BitHodler (1)
 #14

That's why setting contracts is never going to be intelligent, too much scamming in there.
Ok, let's see. If I have correctly understood, you are talking about selling contracts instead of bitcoin (for, as long as I can read you are talking just about bitcoin)? What do you exactly mean by that? People buy and sell BTC, yet there are many exchangers in which you don't really own the bitcoin, is that what you meant?

Futures contracts are agreements to buy or sell at the contract expiration date. So, if you buy contracts at $9,000 and hold until expiration at $14,000 you will have profited by $5,000 times the number of contracts you held.

Both the CME and Cboe bitcoin futures are cash-settled contracts, so there is no BTC collateral involved whatsoever. People believe that for this reason, there will be manipulation. In reality, it's difficult to manipulate that way because the collective market can arbitrage the price spread by simultaneously longing futures and shorting spot (or vice versa).

I can't see exactly your point, due to the misuse of the concept of crypto, I believe. Why should I buy a contract instead of a bitcoin by myself? Because of the lower price? But isn't it just a crystal-clear scam?

They're only a scam insofar as all futures markets (or ETFs for that matter) are scams. These markets are intended to track the spot markets. For risk and compliance reasons, many investors/entities cannot or will not participate in BTC spot markets. Futures markets -- and potentially ETFs -- are an avenue for those people to get exposure to the market.

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May 03, 2018, 11:36:01 PM
 #15

For risk and compliance reasons, many investors/entities cannot or will not participate in BTC spot markets. Futures markets -- and potentially ETFs -- are an avenue for those people to get exposure to the market.
Indeed. People still don't seem to understand that unfortunately. It has been like that with Soros and Rothschild as well. People blatantly assume that they will buy crypto directly, while it's actually only the exposure they are after.

They don't care about crypto itself, and for that reason likely won't bother going for it, and then we have the legal side forming an obstacle. It perfectly shows why the volumes of the future markets have been growing lately.

I like how this offers loud traditional skeptics the option to put their money where their mouth is. If they really believe in a crash or doom scenario, then that's their way to back up their words, otherwise they are full of shit.

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May 13, 2018, 05:58:57 AM
 #16

I think that derivatives, in particular futures for bitcoin will affect the market of cryptocurrencies, but only on a psychological level, because large exchanges that already support bitcoin futures (Chicago, CBOE) will correct the market, but only if the volumes of trading will be impressive.
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May 13, 2018, 08:43:22 AM
 #17

I think that derivatives, in particular futures for bitcoin will affect the market of cryptocurrencies, but only on a psychological level, because large exchanges that already support bitcoin futures (Chicago, CBOE) will correct the market, but only if the volumes of trading will be impressive

The derivative market has more than a psychological impact. It provides an opportunity for institutional investors to short Bitcoin. That gives then the confidence to enter the market in the first place.
Volumes may be low now, but that will change when the market matures.


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Hannahanto
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May 13, 2018, 09:07:12 PM
 #18

In future bitcoin will rule the world, in future there is no value for paper money. Once bitcoin will accept by governmnet it will dominate he local currency. Because many investors are keeping their eye on bitcoin for their business. There are lot of traders also interested to do bitcoin transactions. Now itself more people are ready to invest in bitcoin because the profit of bitcoin os more than other bank investments. So if bitcoin future is an great and its supports the economic growth of a country if accepted by government of all countries.
Sandeep24
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May 14, 2018, 10:03:48 AM
 #19

Ofcourse Bitcoin future is very bright becuase most of economic power countries are accepting cryptocrunncy.
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May 16, 2018, 10:46:39 AM
 #20

The future of bitcoin will depend on its legal acceptance. I mean that if governments constitution  begin to reflect and include the usage of bitcoin in financial transaction even as an alternative to fiat, that is just what it needs.

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