Bitcoin futures trading

[Pan Troglodytes]

Hi there,

after reading the article on coindesk on bitcoin future trading markets opening in Dec, it struck me that both the markets are cash only, meaning that they will not directly interact with bitcoin market (you cannot request that real bitcoin be delivered to you when your contract matures, you just have to settle to receive the cash difference between the contract and market price).

I was thinking about it and it struck me, that the consequence of it is really huge: in fact, the futures market will be just a side market to bitcoin market. It may be larger in terms of turnover as the institutional players will dominate it, but directly not able to affect the real bitcoin price. They will be just like watchers to bitcoin market, being able to bet on the future price, but not able to influence it. Like watching the horse race and being able to bet, but not being able to put any influence on horses nor raiders.

If my reasoning is true, that would mean that opening of those future markets is only good for bitcoin price: it will be the publicity it still needs and the initial hype will make the price increase even more, but it will not give the ability to banksters to regulate the price and artificially adjust it to their needs (as they have been doing in gold and silver markets for years) because they will have no influence over the price.

Is my reasoning correct? I am very curious what you guys think about that.

And the article I was referring to is the one: https://www.coindesk.com/threat-bitcoin-futures/

[Mr.Smithers]

So if I get you right, you are saying that the doubts expressed on that forum in many many threads that future contracts trading will be actually bad for long-term bitcoin price (because it can be artificially leveraged and artificially kept low) are unfounded?

[coolcountry]

But if a lot of huge investors start investing in bitcoin via these futures, isn't it theoretically possible that we reach a stage where whales are able to control the price via pump and dump cycles? I like futures because they increase the legitimacy of bitcoin, but they also open up the possibility of the price being controlled to a certain extent.

[Pan Troglodytes]

But if a lot of huge investors start investing in bitcoin via these futures, isn't it theoretically possible that we reach a stage where whales are able to control the price via pump and dump cycles? I like futures because they increase the legitimacy of bitcoin, but they also open up the possibility of the price being controlled to a certain extent.

If my understanding is right, and that is the question I wanted discussed in this thread, then futures market would have no direct influence over the market of real bitcoin and thus no ability to cause pump and dump of its price.

Of course, indirectly it could cause some changes in the market of real bitcoin, just as even "mouth statements" especially if expressed in high profile media by high profile personalities (Warren Buffet is a great example here) can cause the BTC price to increase or decrease. But that influence is indirect and rather psychological than anything else.

[zenrol28]

This future contracts will take bitcoin's rollercoaster ride to the next level. I have read your source and i read from another source. They came to have different explanation. I think we'll see it when the actual date comes.

To your question, large investors could make a pump and dump situation since they don't need to buy the full contract amount. They'll still have reserves to buy actual bitcoins and dump it before the contract end earning more profit.

This is the article I'm referring https://cointelegraph.com/news/how-cme-groups-bitcoin-futures-will-work