Bitcoin futures starting to trade is very similar to a stock in a crazy bull market starting to trade on futures on our exchange. Until futures start trading, there are only bulls - everyone holding the underlying benefits when prices goes up. But Futures bring in the bears as well, people who make money when prices go down.
Here are two things that potentially could happen
Bears coming in, slows down the up move. Maybe even giving an opportunity to those really big naysayers of bitcoin to hammer the price down and profit from it. These big players can potentially also get some political/regulatory/press help.
Bears coming in a crazy upmove potentially can mean getting caught in a wrong trade. When the shorts are forced to cover their positions due to losses, there is further impetus for the bitcoin bull market.
Curious to know what you all think will happen. One of the above two theories, or something else?
Bitcoins are valued way higher than fiat currencies and people are kinda hoarding them, just buying and waiting for the prices to move up. Any further increase in prices or large price fluctuations at a higher level will only make bitcoins even more unusable as a medium of exchange. Its initial intent of creation.
Bitcoin enthusiasts are going - “The sky is the limit”. But there is gravity too. As you’ve already pointed out, gravity could come in the form of shorting futures and finding a fair price for the coin.
And if this coin has to ever be used as a medium of exchange, then it has to start behaving normally first. A price correction and search for better valuations could bring in this normalcy, if at all.
Bitcoin will be get listed on US exchange from 16th of this month by CME . I believe bitcoin will go much higher from this price because many international companies using bit funds as reserve money for emergency situation and many more will follow the path . If price raise in initial days the retail investors will put huge money in the market just like what happened with Amazon bubble. Bitcoin price will be get stable at some price but it will take some time ( i guess at least 1 year ) . There few other currencies which are coming up with more efficient technologies will surely kill this bitcoin trend .
The bitcoin hysteria will continue to rage for sometime. I am optimistic and quiet sure it has not topped off and can be bought on declines. Till crypto currencies comes into the mainstream where ppl are buying everyday products using cryptocurrencies we will see bulls investing. Whether we go that far… who knows. But the bull run for bitcoins and current market conditions are favourable. So far bitcoin has been very volatile - introducing futures will add stability.
I believe there will be some stability from now on, all these days Bitcoin trading was happening in the somewhat grey market, introducing it on exchanges will bring in more regulatory framework around it, but having said that my personal opinion is that it will not stop its bull run and will continue to move up because of its reputation and growing interest of investors into cryptocurrencies, Etherium is an another cryptocurrency to watch out for which is building a whole new project on blockchain technology.
The bears will come and tear down bitcoins to bits. I’ve been in the stock markets for quite a while and have always felt stupid when I miss a rally. I feel smart about staying away. Only time will tell.
One thing is for sure , the introduction of futures will definitely attract the attention of more institutional investers.As a result market cap and the price will jump up in the near future , but will it be able to sustain itself is the question. There are chances that there will be a correction after that. However , one thing is certain , BTC is here to stay, Another thing interesting to watch out here is how will the world governments react to it (SEBI and RBI have already joined hands to to study and prepare a framework for the digital currency) , even if they bring in heavy regulations , it will be difficult to completely eradicate BTC from the web. Very very difficult to regulate but comparatively easy for techies to escape from the eyes of the regulators.
And since BTC is not uniform (every exchange reflects different prices) , there are chances that it could be manipulated , bears or bulls , they may be able to find a loophole. But even if they do that , the strong and loyal BTC community can counter it and ensure that the gap is filled.
I strongly feel that BTC is here to stay,there will be ups and downs , but with time BTC is going to evolve and mature into a stable currency.
Bitcoin Bulls are also strong hands who invested a lot in Bitcoin mining data centres, tech startups etc. They will protect the higher prices with everything they can. They hold majority of coins and there is a lot of skin in the game for them to withstand.
Shorters to has to be big players to withstand a short squeeze or need to be insiders who can liquidate who huge cryptocurrency positions ahead of a short trade in futures.
@hanan, in line with your thought, quoting Gordon Gekko from Wall Street : Money Never Sleeps.
“This is the greatest bubble story of all time. Back in the 1600’s, the Dutch got speculation fever to the point where one could buy a beautiful house on a canal in Amsterdam for the price of one tulip bulb! They called it Tulipmania. Then it collapsed. People got wiped out. Who remembers.”
I think the principle reason that what satoshi nakamoto wanted to prove through BITCOIN is coming real to full form through such missing link.
Now futures will help bring in more believe and serious attention of people into open economy concepts like LINUX.
But I see a fundamental flaw in this move… or at least my understanding of this domain. Think of a stock and its futures, say Infy in the spot market and Infy in Futures markets. Here the underlying is the same as its futures, and the trading of both these financial assets are regulated by the same regulator.
But this is not the case wrt Bitcoins. The bitcoin as an asset class is completely unregulated and this is by design. In fact ‘being unregulated’ and decentralized is the underlying philosophy of Cryptocurrencies.
The bitcoin Futures on CBOE (or any exchange ) however, will be regulated by SEC, because it is a futures instrument.
So my question is - how will the futures ever live up to to the underlying’s true spirit? Wont this create a huge spread in prices? if yes, who/what/how will the spread contract?
For example it’s already really going down after really really big start and what to do ? There is still marging with which you can really operate but what is next here ? Are you with me here ? Do you have money to buy it on $10k per piece.
