Bitcoin futures

[shinzai]

Hi!
I'm a bit confused by all the talk about how bitcoin futures will affect bitcoin price.

As far as I understand, a futures contract is a binding agreement between 2 parties where mr A will buy an asset from mr B at a beforehand specified price and time.

The asset can be any commodity like oil etc, and are used both by producers as hedge and by speculators.

It is often possible to settle the agreement directly in cash, without buying/selling the actual underlying asset. I suspect most speculators prefer this option.

So, how will bitcoin futures work?
Will they require buying/selling bitcoin itself or will they just be settled in fiat cash?

I suspect these futures will primarily be used by speculators who probably will prefer to just settle them in cash.

So why would such a contract affect the bitcoin price at all?


I'm new so thanks for taking your time and explaing this to me

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[cellard]

Hi!
I'm a bit confused by all the talk about how bitcoin futures will affect bitcoin price.

As far as I understand, a futures contract is a binding agreement between 2 parties where mr A will buy an asset from mr B at a beforehand specified price and time.

The asset can be any commodity like oil etc, and are used both by producers as hedge and by speculators.

It is often possible to settle the agreement directly in cash, without buying/selling the actual underlying asset. I suspect most speculators prefer this option.

So, how will bitcoin futures work?
Will they require buying/selling bitcoin itself or will they just be settled in fiat cash?

I suspect these futures will primarily be used by speculators who probably will prefer to just settle them in cash.

So why would such a contract affect the bitcoin price at all?


I'm new so thanks for taking your time and explaing this to me

In theory, futures should be backed by real bitcoin holdings which the issuers of the futures would hold, but im not sure... I think futures is just legal institutional gambling. Wall Street will try to control the price through futures. It depends on how stupid the market is to let themselves get manipulated by the price of something that is not even real Bitcoin. We are dealing with billionaire weasels now, it's a new different level never seen before in Bitcoin.

My recommendation: Ignore futures and it's price, and only trade real bitcoins directly, anything that isn't this is on the scammy side.

[warrior333]

It is possible to trade bitcoins with futures is an attempt to make the price of bitcoin is predictable. Theoretically, if you know how many coins will be sold in the future and at what price then you can predict the price. I don't know if it will work this option, but I don't like it. Perhaps today's prices is an attempt of speculators to make money before they leave the bitcoin.

[Ronaldcoin2017]

It is possible to trade bitcoins with futures is an attempt to make the price of bitcoin is predictable. Theoretically, if you know how many coins will be sold in the future and at what price then you can predict the price. I don't know if it will work this option, but I don't like it. Perhaps today's prices is an attempt of speculators to make money before they leave the bitcoin.

Well future of bitcoin is not really predictable because it is really unstable kind of investment it is really dpend on tge market demand or maybe tge users demand it was just like a product that if no one use it the price will go down.I believe that bitcoin today is rising or maybe grown fast because it is really profitabke and many people believe that bitcoin is our new hope or maybe a new way to make dreams come true that was really amazing .

[shield132]

I want to post my opinion too which is different from your OP. Usually bitcoin users are very optimistics, people has seen that it was possible reach 1000$ and however it didn't stop here. Now people have hope that this rise can continue and it's bitcoin's aim but there is only a need of one little panic and you will be amazed how quickly this coin will fall.

[aardvark15]

Hi!
I'm a bit confused by all the talk about how bitcoin futures will affect bitcoin price.

As far as I understand, a futures contract is a binding agreement between 2 parties where mr A will buy an asset from mr B at a beforehand specified price and time.

The asset can be any commodity like oil etc, and are used both by producers as hedge and by speculators.

It is often possible to settle the agreement directly in cash, without buying/selling the actual underlying asset. I suspect most speculators prefer this option.

So, how will bitcoin futures work?
Will they require buying/selling bitcoin itself or will they just be settled in fiat cash?

I suspect these futures will primarily be used by speculators who probably will prefer to just settle them in cash.

So why would such a contract affect the bitcoin price at all?


I'm new so thanks for taking your time and explaing this to me

I have heard that they will be cash settled. I don’t think you would buy actual Bitcoins (or short actual Bitcoins). I don’t know how this will affect the price of actual Bitcoins but is seems that there could be potential for manipulation of the price by doing futures contracts.

This could be good or bad for Bitcoin. It’s new territory for us so we’ll find out the ramifications after the contracts are on the market.

[DutchNed]

If they are only betting with contracts and pay each other in dollar or euros but don't actually buy BTC how could it possibly effect the market?
For example: if I make a bet with someone how many BMWs will pass through a particular street and the one who gets closest wins, how could that possibly effect the sale or price of BMWs?
I don't know much about the stock market so maybe someone can give me a better example.

[shinzai]

In theory, futures should be backed by real bitcoin holdings which the issuers of the futures would hold, but im not sure... I think futures is just legal institutional gambling. Wall Street will try to control the price through futures. It depends on how stupid the market is to let themselves get manipulated by the price of something that is not even real Bitcoin. We are dealing with billionaire weasels now, it's a new different level never seen before in Bitcoin.

My recommendation: Ignore futures and it's price, and only trade real bitcoins directly, anything that isn't this is on the scammy side.

Hi & thanks for answering. Can you please explain the point of backing futures with a commodity if the contract is to be cash settled? Why would that be needed?

I have heard that they will be cash settled. I don’t think you would buy actual Bitcoins (or short actual Bitcoins). I don’t know how this will affect the price of actual Bitcoins but is seems that there could be potential for manipulation of the price by doing futures contracts.

This could be good or bad for Bitcoin. It’s new territory for us so we’ll find out the ramifications after the contracts are on the market.

Thx for contributing. Can you please explain how that manipulation would work if futures are settled in fiat? Do you refer to that bitcoin could be bought/sold on-chain in order to manipulate future positions? Becuase that's the only possibility I can see. I.e. not the other way around.


As far as I've come to understand, when the price moves too much in one direction then one side of the futures contract will gradually lose money on his account and eventually risk margin call. Then, if he doesnt deposit more money the exchange will forcefully liquidate his position by selling the future contract (if Long) to someone else. The losing speculator is left with nothing on his account. But he will never have to buy/sell actual bitcoins, right?

[ugr_erkn92]

The fact that Bitcoin futures will be started has already raised Bitcoin prices, the news has been bought. Futures will also contribute positively to the legality of Bitcoin. Bitcoin' price isn't going to be constantly growing, I am expecting a drop, small investors must be very cautious.

[iamTom123]

It is possible to trade bitcoins with futures is an attempt to make the price of bitcoin is predictable. Theoretically, if you know how many coins will be sold in the future and at what price then you can predict the price. I don't know if it will work this option, but I don't like it. Perhaps today's prices is an attempt of speculators to make money before they leave the bitcoin.

I am not an expert on futures much more I can't predict how will this new Bitcoin Futures affect the price of the real Bitcoin   but I am more inclined to believe that maybe in the next few months these futures may directly affect Bitcoin but later on the overall Bitcoin market may just ignore these futures and put them on the sideline. I can sense that the Bitcoin market is not anymore stupid that can easily be swayed by the forces around it. The way I see it is that it will be Bitcoin that will sway the Bitcoin Futures and not so much the other way around. But then again, we might as well wait on how things will materialize on this new development. Right now, the market sentiment is very much excited for the futures primarily because this is the concrete step towards the legitimization of Bitcoin which is a big news for all of us in the Bitcoin community.

[XinXan]

In theory, futures should be backed by real bitcoin holdings which the issuers of the futures would hold, but im not sure... I think futures is just legal institutional gambling. Wall Street will try to control the price through futures. It depends on how stupid the market is to let themselves get manipulated by the price of something that is not even real Bitcoin. We are dealing with billionaire weasels now, it's a new different level never seen before in Bitcoin.

My recommendation: Ignore futures and it's price, and only trade real bitcoins directly, anything that isn't this is on the scammy side.

Hi & thanks for answering. Can you please explain the point of backing futures with a commodity if the contract is to be cash settled? Why would that be needed?

I have heard that they will be cash settled. I don’t think you would buy actual Bitcoins (or short actual Bitcoins). I don’t know how this will affect the price of actual Bitcoins but is seems that there could be potential for manipulation of the price by doing futures contracts.

This could be good or bad for Bitcoin. It’s new territory for us so we’ll find out the ramifications after the contracts are on the market.

Thx for contributing. Can you please explain how that manipulation would work if futures are settled in fiat? Do you refer to that bitcoin could be bought/sold on-chain in order to manipulate future positions? Becuase that's the only possibility I can see. I.e. not the other way around.


As far as I've come to understand, when the price moves too much in one direction then one side of the futures contract will gradually lose money on his account and eventually risk margin call. Then, if he doesnt deposit more money the exchange will forcefully liquidate his position by selling the future contract (if Long) to someone else. The losing speculator is left with nothing on his account. But he will never have to buy/sell actual bitcoins, right?

This is what Cboe says: XBT futures provides investors with the opportunity to buy, sell and trade bitcoin futures or implement your trading strategies without having to pay for the actual currency. The single price settlement process gives participants the option of using XBT futures to hedge their exposure in underlying bitcoin or gain exposure to traded bitcoin prices without holding bitcoin.

So no, you are never buying or selling, that's pretty much the point. This should push bitcoin price higher, if it's not already doing it but eventually it's going to be bad.

[Beefcake]

I think that the significance of futures is not necessarily the contracts themselves, but that the approval of futures signals wall street's acceptance of digital currencies.  Since its creation bankers, ceos, and academics have only had bad things to say about bitcoin.  But this is proof that big money, or at least some big money institutions, see it as legitimate.  I know a lot of people who used to think that it was just a scam.  But now they they may have to reevaluate that opinion.

It is happening sooner than I thought, but I think we are seeing the beginning of wide spread adoption.

[lucifochrome]

From what i understand with bitcoin futures, i think that this is backed by institution with a huge amount of bitcoins on hand, What they will do is to have you put the x amount of bitcoin ahead of time in terms of a contract, something like betting, now if by that time bitcoin's price rise from the amount on the contract then i guess you double your bitcoin but if it dips then you will lose double because you will not be able to sell it short.

[TTITA]

From what i understand with bitcoin futures, i think that this is backed by institution with a huge amount of bitcoins on hand, What they will do is to have you put the x amount of bitcoin ahead of time in terms of a contract, something like betting, now if by that time bitcoin's price rise from the amount on the contract then i guess you double your bitcoin but if it dips then you will lose double because you will not be able to sell it short.

Looks like I agree with your opinion.
If the current bitcoin price increase is caused by pump manipulation of a group of people, then this becomes a high risk investment, which can be a sudden loss in case of a panic dump.
The problem that still exists today is about the number of transactions that stuck in the chain, if this continues to happen then btc sales will not happen instantly anymore.

[TTITA]

Hi!
I'm a bit confused by all the talk about how bitcoin futures will affect bitcoin price.

As far as I understand, a futures contract is a binding agreement between 2 parties where mr A will buy an asset from mr B at a beforehand specified price and time.

The asset can be any commodity like oil etc, and are used both by producers as hedge and by speculators.

It is often possible to settle the agreement directly in cash, without buying/selling the actual underlying asset. I suspect most speculators prefer this option.

So, how will bitcoin futures work?
Will they require buying/selling bitcoin itself or will they just be settled in fiat cash?

I suspect these futures will primarily be used by speculators who probably will prefer to just settle them in cash.

So why would such a contract affect the bitcoin price at all?


I'm new so thanks for taking your time and explaing this to me

In theory, futures should be backed by real bitcoin holdings which the issuers of the futures would hold, but im not sure... I think futures is just legal institutional gambling. Wall Street will try to control the price through futures. It depends on how stupid the market is to let themselves get manipulated by the price of something that is not even real Bitcoin. We are dealing with billionaire weasels now, it's a new different level never seen before in Bitcoin.

My recommendation: Ignore futures and it's price, and only trade real bitcoins directly, anything that isn't this is on the scammy side.

It could be the fact that bitcoin futures become a mere market manipulation.
As for trading stock and asset require to price stability in the market. The Billionaire weasels you are talking about are something that has not been in the bitcoin yet, they are only concerned with the profit without thinking about the future impact. that's why this is a high risk in terms of trade.

[shinzai]

Thanks everyone for your contributions to the subject, but so far I have not recieved any clear answer to why the bitcoin price would be affected by bitcoin futures trading (that will be settled in fiat).

Sure, the launch of bitcoin futures is good news to bitcoin, but I've seen journalists speculating in traders shorting bitcoin etc and what effect that would have on the bitcoin price.

Why would it have any effect at all?

[XinXan]

Thanks everyone for your contributions to the subject, but so far I have not recieved any clear answer to why the bitcoin price would be affected by bitcoin futures trading (that will be settled in fiat).

Sure, the launch of bitcoin futures is good news to bitcoin, but I've seen journalists speculating in traders shorting bitcoin etc and what effect that would have on the bitcoin price.

Why would it have any effect at all?

Ok, so you don't understand why something that is being traded in fiat would have any effect in bitcoin themselves, right? I'm not an expert myself in futures but this guy did a pretty good analysis:

https://masterthecrypto.com/will-bitcoin-futures-affect-bitcoin-prices/

It seems that, for example, for gold it didn't work too well short term but eventually was meaningless so you might be right. Bitcoin might not be affected at all by it. However because bitcoin is purely speculative right now, I'm sure it will drive the price even higher, hard to tell right now because it's already climbing hard anyways.

[shark69]

I think bitcoin will be big and very profitable, even bitcoin can be a hope in the future for some people in the world. the current bitcoin price is very good, reaching hundreds of millions.

[shark69]

I think bitcoin will be big and very profitable, even bitcoin can be a hope in the future for some people in the world. the current bitcoin price is very good, reaching hundreds of millions.

[Nana_Marini]

Bitcoin has good future. Now, many more people join bitcoin because with bitcoin many people get reward. So it can diminish unemployed person