How could futures impact bitcoin?

[braveheart]

I don't fully understand the Futures market.
How could futures impact bitcoin and its price?

[pitiflin]

I don't fully understand the Futures market.
How could futures impact bitcoin and its price?

Here's the deal with these futures. You don't actually hold any bitcoin on your own, but you do own some sort of financial instrument given by the CBOE, and it states that they hold bitcoin on the investor's behalf not precisely but somewhat like that. This derivatives is only to be paid in cash and it'll affect the price is institutional buyers would love to influence the price on their own, and this could be a big deal later on.

[braveheart]

I don't fully understand the Futures market.
How could futures impact bitcoin and its price?

Here's the deal with these futures. You don't actually hold any bitcoin on your own, but you do own some sort of financial instrument given by the CBOE, and it states that they hold bitcoin on the investor's behalf not precisely but somewhat like that. This derivatives is only to be paid in cash and it'll affect the price is institutional buyers would love to influence the price on their own, and this could be a big deal later on.

Thanks for your response.
So, I'm guessing the CBOE would have been loading up with Bitcoin prior to 10th Dec. The demand driving prices up?

[HasHe]

I don't fully understand the Futures market.
How could futures impact bitcoin and its price?

It would not affect bitcoin price directly.It would just remain as oil futures,gold futures do remain without having any direct impact on such commodities.It would just boost bitcoin price to a small extent.Both bitcoin and bitcoin futures would travel parallel and bitcoin futures would be valued based on the current price of bitcoin in gemini exchange.Bitcoin futures increase in price would serve as a cause for increase in bitcoin price.

[IT_AEX]

I don't fully understand the Futures market.
How could futures impact bitcoin and its price?

It would not affect bitcoin price directly.It would just remain as oil futures,gold futures do remain without having any direct impact on such commodities.It would just boost bitcoin price to a small extent.

So CBOE and future market companies, do not hold bitcoins on their own?

[indiangrad]

I don't fully understand the Futures market.
How could futures impact bitcoin and its price?

It would not affect bitcoin price directly.It would just remain as oil futures,gold futures do remain without having any direct impact on such commodities.It would just boost bitcoin price to a small extent.

So CBOE and future market companies, do not hold bitcoins on their own?

Not as part of their business

[pixie85]

So in other words you're asking someone to buy coins for you and that person handles all the risk and technicalities like managing wallets, trading on exchanges, verifying accounts, security of holdings and so on. You get an IOU from them and if they lose the coins, get hacked, whatever, they still have an insurance and owe you money as a registered business. Am I correct? This means futures are a way for technical newbies or people who are afraid to take the responsibility for their own coins to still be able to invest.

[xbl1008]

future is a financial institution that offers margin trades to its users, it has a lot of users so we can see a huge trades of bitcoins here it may cause more volatility in the bitcoin price as of now and it may also make hasten the increase of its price.. but with the high risk of margin some may lose its bitcoins while some might win very big in this matter.

[pinkflower]

I don't fully understand the Futures market.
How could futures impact bitcoin and its price?

This derivatives is only to be paid in cash and it'll affect the price is institutional buyers would love to influence the price on their own, and this could be a big deal later on.

Wrong. To influence the price of BTC, the institutional traders, not just buyers because they also sell, would have to buy real BTC. This is counterproductive if they also trade BTC futures. The futures market is maybe only good as a hedge to lessen risk for institutional investors who already hold BTC.

[Anait]

I think this is something similar to the stock market, where there are analysts and technical people who serve as an advisory team helping to buy and sell taking certain amount as charge or commission for the work done.

[chiggz]

As far as i know in futures cash settled so basically this market is people betting each other in USD on what will happen to the price of Bitcoin. No Bitcoin is being moved or delivered here. For each futures trade there is a counterparty betting USD, not BTC. They measure the price of BTC exchanges and go off that for the market.

[kiwasmose]

For America's bitcoin futures business this month, I think it will enlarge the volatility of bitcoin, and it will probably go up and down more vigorously. I think this is unfavorable for the development of the encrypted currency. We should let the community grow slowly, and now we don't need the financial instruments.

[igybadger]

Futures trading is just betting on the price of something at some point in the future.
In that sense it is no different to gambling. I expect there will be more volatility when these markets come online. All i can say is "pity the fool that bets against a deflationary currency using an inflationary one". The people going into this market expecting it play by the same rules as the existing financial markets are going to be the ones who get burnt the most.

[krishnapramod]

There would be a dual market, futures and Bitcoin market, might be interdependent or independent. Cash-settled Bitcoin futures would allow Bitcoin skeptics/institutional investors to bet against Bitcoin without even buying it or there is a possibility that these investors will want to suppress the price so they can buy Bitcoin at a discount, either way this would lead to a new price discovery mechanism.

Just read an article on, will the futures market do to Bitcoin what it did to gold?

1: The velocity of information is orders of magnitude faster — I doubt most market participants in 1975 even knew that gold futures were a thing.

2: The Demand to hold Bitcoin is one of the highest of any assets ever — Bitcoiners have learned to buy the dip and hodl.

3: Bitcoin has more competitors than gold.

https://medium.com/swlh/will-the-futures-market-do-to-bitcoin-what-it-did-to-gold-b7d35704641

[fiulpro]

Well lets give you a short information.
Through futures the market the CME will sell 5 bitcoins to individuals or authorities and Everything will be dealt in cash now... If they are gonna sell bitcoins then they should buy bitcoins ... Right ? Fair enough.. and when they will buy bitcoins then ... The cost per bitcoins will increase due to high demand and the limited supply... Thus we can see an incredible increase in the price of bitcoins and the futures will start trading from 18 December thus you can expect the peak at 20 - 21 because those who have already set their eyes on this will for sure buy before that... Well now...
The bad news is..that CME could easily regulate the price of bitcoins and if one day they decided to ditch the bitcoins market then ! There is nothing that we would be able to do...and the price will fall down and investors will run away..

[red123]

It's just way to loos your money if BTC will fall down

[daringdiscovered]

I don't fully understand the Futures market.
How could futures impact bitcoin and its price?

This derivatives is only to be paid in cash and it'll affect the price is institutional buyers would love to influence the price on their own, and this could be a big deal later on.

Wrong. To influence the price of BTC, the institutional traders, not just buyers because they also sell, would have to buy real BTC. This is counterproductive if they also trade BTC futures. The futures market is maybe only good as a hedge to lessen risk for institutional investors who already hold BTC.

What do you mean by real BTC? there is no fake BITCOIN, lol, only real ones exist. The market of the cryptocurrencies and the market that we have in the real world is going to adopt bitcoin for sure in the near future, once they have realized what bitcoin really could do and what it could help them to make this society develop into something better, bitcoin is the future.

[qwertyup23]

I don't fully understand the Futures market.
How could futures impact bitcoin and its price?

That what makes bitcoin very unpredictable, considering its volatile price and decentralized nature makes it very hard to determine the final price at the future. Considering that bitcoin is the hot-topic at the world currently due to skyrocketing of its price, no one really knows what will the future may bring. Big investing companies and investors are stating that bitcoin may be the biggest bubble in the history of the internet as it may soon pop, but others sees it as an opportunity to invest whether for short or long-term due to its high-risk, high-reward system.
I agree that it is very difficult nowadays to understand the future price of bitcoin but you must focus on investing first as tomorrow might be the unpredictable. Like what others say, expect the unexpected when investing into bitcoin.

[BillCoin]

I had a very strong theory about the impact of the futures market openning on the Bitcoin's price.

I believe that it has a positive impact on the market as it adds a massive amount of liquidity.
I can't conclude if it is going to affect the price positively or nagatively , but I do believe that it is a totally game changer.

[Rahar02]

To understand how futures affect bitcoin price, you have to read basic information about futures contract:
- As defined by the CME CF Bitcoin Reference Rate (BRR), Bitcoin future will have 5 BTC as contract unit.
- Unlike Bitcoin exchanges, Bitcoin future will have a defined trading window and circuit filters.
- CME Bitcoin future brings the option to short Bitcoin.
https://seekingalpha.com/article/4128569-5-things-aware-cme-bitcoin-futures

In general; bitcoin futures has nothing to do with bitcoin as the contract settled in dollars and there is no any bitcoin involved, contract holders simply bet on bitcoin price.
But, bitcoin futures bring some advantages as many investors may be interested to buy bitcoin to slightly affect the price in order to win their contract or vice versa. On the other hand, bitcoin seems to gain more attention and reliance from big trading group which intrigue other companies to learn about bitcoin.