Bitcoin futures were popular in the second quarter of 2018. The CME Group published data showing that the average daily volume increased by 93 percent compared to the first quarter.
Interest in Bitcoin Futures, more specifically the number of Bitcoin futures contracts, has exceeded 2400, an increase of nearly 60% over the first quarter of 2018.
The rise in CME’s BTC Futures is also reflected in the increase in the volume of derivatives markets. In a recent press release it was announced that the average daily volume increased by 13% to over 4 million contracts.
The CME Group launched Bitcoin futures on in December 2018. However, Bitcoin futures continue to be a hot topic of discussion in the Bitcoin community. Above all, many think that BTC futures could manipulate the Bitcoin price.
Bitcoin Futures had already been traded for years on unregulated Bitcoin broker sites like on BitMEX. This is one of the most popular trading sites for Bitcoin and major altcoins as you can learn on http://www.bitcointradingsites.net/broker/bitmex-com/.
However, those markets hadn’t been usable for big traditional investors, that’s why those BTC Futures hadn’t been traded by institutions.
Institutional Investors Interested In Bitcoin Futures
The interest in the Bitcoin futures shows the interest of traditional investors wishing to enter the crypto market. Coinbase has recently launched a solution for institutional investors: a USD 20 billion hedge fund hedged by Coinbase for investors.
The extreme volatility of the crypto market is more than attractive to investors. They can benefit from price fluctuations via futures contracts.
Due to this interest, a Bitcoin ETF will now follow, which has been applied for by the CBOE. So far, public comments on this ETF application have been more than positive.
The result could be one of the biggest Bitcoin Bull runs in history. The decision will be made around 15 August. Until then, the question remains how likely a Bitcoin ETF is at all.
BlackRock Inc – the world’s largest provider of Exchange Traded Funds (ETFs) – recently announced that an internal group has been formed looking for ways to integrate cryptocurrencies into the business model.
Unlike futures contracts, ETF providers would have to buy the underlying, i.e. Bitcoin. This removes liquidity from the market and increases demand for the digital currency.
Did Futures End The Bitcoin Rally In 2017?
The rapid run and subsequent fall in prices following the introduction of futures does not appear to be a coincidence, but is in line with the trading behaviour typically associated with the introduction of futures markets for an asset.
While many suspect that the Bitcoin futures have negatively affected the price, an analysis suggests that the futures have had and continue to have virtually no impact on the Bitcoin price. In fact, futures trading only has an impact of 0.009 percent on the price of BTC.
What Doesn’t Kill Bitcoin Should Make It Stronger
Using the real estate market crisis and the devaluation of the Japanese stock market in the 1990s as examples, Fed economists point out that new financial instruments have a record number of deflating financial bubbles. In this case, when enthusiastic investors drove up Bitcoin’s price, the futures market opened up and pessimists were able to bet their money against the cryptocurrency for the first time.
Bitcoin’s rapid rise in 2017 brought public attention to cryptocurrencies and blockchain technology, which was good for the growth of the emerging blockchain sector. Some analysts have argued that the turbulent 2018 market will end up being good for the future of cryptocurrencies as weak coins die and disappear and established ones continue to rise, similar to the dotcom era.
Regarding the future of cryptocurrencies you can read this interesting forecast: https://www.finder.com/cryptocurrency-predictions.
What Actually Is A Future?
A futures contract is a forward contract with which commodities or financial products are traded at a predetermined price at a certain future point in time, i.e. sold or disposed of. Forward contracts are used on the one hand to hedge against price fluctuations.
For example, airlines can protect themselves against the negative consequences of price fluctuations in kerosene. What is required is at least a clear opinion on future price developments. In theory, this should make trading quieter and the future more predictable for companies.
Due to their design, however, futures are also ideally suited for speculation. Due to the leverage effect, strong profits are possible – but above all also losses that can massively exceed the input value.
And trading has not yet become more quiet so far. The price of the forward contract, which runs until mid-January, shot up by a good quarter last Monday. The CBOE had to interrupt trading temporarily. After all, the price differences at Bitcoin on various trading platforms, some of which have been very high so far, have diminished somewhat.