Bitcoin futures - what is it and what consequences can it have?

The market of crypto-currencies is going through not the best of its times and, of course, the fluctuations in the price of bitcoin are in the center of attention. The course to the moon unexpectedly for all overcame the earth's gravity and the main crypto-currency substantially subsided, pulling the altcoyans. One of the reasons for this unfavorable incident is called bitcoin futures, launched on YOUR and SME. Whether this is true, what impact contracts will have on the market of crypto currency in the future and what are generally futures - you will learn from this article.

What is the Future?

You can not talk about futures contracts for Bitcoins, if you do not clarify what the futures itself is. If we operate with the classical interpretation of this term, then futures is a contract for the purchase of a specific product at a specific price within a designated period. And even if the name itself does not seem to you to be remote from the affairs of the world - it starts its futures from selling agricultural products that were conducted several centuries ago. In those days, exchanges were not at all like now and were needed for specific everyday purposes, and not for speculation. The first futures looked like a deferred purchase agreement: the farmer grew corn and, at the time of his ripening, agreed that he would sell it to a specific buyer when the harvest was collected. At the same time, the price of the goods was indicated in advance, and it was not subject to change - thus, the buyer was insured against the rise in price of the goods in the future.

In our time, futures of this kind continue to exist and are called delivery, that is, the contract is for a particular product, after which it will indeed be delivered to the buyer within the specified period. Parallel to this, another type of futures - settlement one - arose, which does not presuppose the supply of goods, moreover, the goods do not take part in the transaction at all. The essence of the futures contract in earnings on the original guessing of the future price of the asset. That is, in contrast to exchange trading, the settlement futures do not involve any purchase - there is no traditional exchange of goods for money, there are only some kind of rates on where the price of the commodity or asset will go. In this situation, the money is earned by someone who knows how to predict better than others, and his winnings are the money of the losers - the difference between the real price and the one that the loser predicted.

For such operations, bitcoin fits as well as possible, because it is one of the most volatile trading tools.

Bitcoin futures - features

The Bitcoin futures contract is a completely speculative instrument. Unlike the principle of trading on a cryptocurrency exchange, where coins are bought / sold, commodity exchanges operate only with contracts, the essence of which boils down to a kind of rate on the rise or fall of prices. Bitcoin purchases or its sale between bidders does not occur, moreover, the coins for which contracts are created and are not real, their number may even exceed the final number of coin generation.

In a specific example, it looks like this. Let's say bitcoin has fixed its price at $ 10000. At this moment, one of the market participants assumes a further rise in the rate of coins and buys a contract for $ 12000 - that is, makes a forecast that the price will reach this mark at a specific time. He leaves a deposit at the exchange in the amount of 10-15% of the purchase amount and waits. At the same time, the other participant accepts this bet and believes in the fall of bitcoin. If the price at the indicated moment reaches $ 12000, then the "seller" will transfer the difference to the "buyer", if on the contrary - the buyer of the contract did not guess the direction of the course and the price dropped to $ 8000 - then the buyer will pay the seller $ 2000.

The value of bitcoin on classic exchanges

Bitcoin futures trading began immediately on two Chicago exchanges CME and CBOE, which caused a real boom in the cryptocurrency market and beyond. This step is significant for the cryptoindustry as a whole, as it confirms that a serious attitude towards digital money has finally appeared on the classical financial market. To some extent, this can be counted on by the official recognition of Bitcoin and unambiguously promises significant changes that we have already been able to feel. At the same time, one should not confuse futures with real exchange trading - bitcoin is not traded on official exchanges and this is far from it, as long as this is only a prerogative crypto-cipher... And futures are just an attempt by traditional investors to make money on coins without investing their money in them - they continue to trade in a comfortable environment for themselves, so to speak, with reduced risk, on their territory and according to their own rules.

The scope of the crypto currency has long attracted large investors in the form of hedge funds and other institutional investors who would be happy to invest in bitcoins and alts, but the unregulated market and high volatility warned before they did it. With the release of bitcoin to futures trading, truly large investors can hedge their risks, because in fact, futures are a very good tool for risk management. In short, large capitals do not restrain anything from influencing this market.

Who benefits from trading bitcoin futures?

As it was mentioned above, first of all new opportunities are opened not for small traders, but for institutional investors - large funds that manage huge amounts of their depositors. Such market participants would not venture to work with crypto-exchange exchanges (such as Binance or Bittrex), but the Chicago Mercantile Exchange is quite another matter.

If you think logically, the exchanges did not start working with bitcoin for nothing, it is obvious that it is very profitable for them - if only because they have their commissions from such trades. At the same time, the Chicago stock exchanges managed to attract large capital to themselves, because apart from them, no classical exchange is yet ready to work in any form with cue ball.

What can lead to bitcoin futures?

Many traders and investors in the crypto currency have perceived the news about futures with great enthusiasm and were expecting an unrealistic growth rate. Initially, such expectations were justified and bitcoin really struck with his jump to the mark of 20000 $. But the market participants had no time to rejoice, because after this moment a deep correction came and beatkoin began to beat anti-record confidently.

Not only futures are to blame - in general, many factors (in the form of fake news, incorrect translations of primary sources and ambiguous statements of authoritative persons) have contributed to the rapid fall of the cue ball. But just thanks to futures, one should expect that the cue ball will not be so volatile anymore. Many experts agreed on the fact that the distribution of forces will now change in the crypto industry. If earlier we saw predominantly retail traders who were interested in the growth of the cue ball and actively bought bitcoins, from which the exchange rate grew, now a large number of traders with bearish sentiments joined the game, who wish to sell their large capitals and be rebuilt with coins. We all know that there are and will be manipulations of the crypto-currency market, but when real whales take part in this, the results should be expected to be the most unpredictable.

Why, contrary to expectations, bitcoin did not make another breakthrough after entering the classical stock exchanges? This can be explained by the fact that at the time of the start of the futures the price of the crypto currency was heavily overbought. Large market participants with a bearish attitude made a logical step - they put a considerable amount down, which could not but affect the price of the asset. Small traders, most of whom are in the market, began to panic and sell coins in bulk, and against the backdrop of unfavorable news, a real chain reaction began.

To some extent futures for bitcoin SME and ITS should be considered as a big step in the formation of the forefather of all crypto-currencies, but it is very likely that the market will not be the same. In the long run, one should expect that the cue ball will be more stable in its price and there will not be any significant leaps (if the manipulators do not consider that it is not profitable for them). Thus, the Crypto-currency risks losing its main features, which were conceived by its creator of Satoshi Nakamoto. If you look for this in the pros, then perhaps now bitcoin will still have a chance of being called a means of payment, rather than a speculative one? Only time will give a definite answer to these questions.

It is quite possible and the reverse situation. When bitcoin, thanks to futures, becomes more stable and acquires the features of an official asset, it will attract the attention of all the same institutional investors who will buy it for a long time - they will see in the cue the object of investment, rather than a tool of speculation. In this case, bitcoin will still be able to please us with active price growth, but it is extremely difficult to predict the probability of such a situation.

What should retail investors do?

Investors and traders who are outside the limits of futures trading, are currently in some confusion. Hamsters have long since merged everything they had, recharged themselves at the bottom and continue to make mistakes, but those who are trying to trade thoughtfully are in anticipation of the growth rate. What to do in this situation and what will the market be like tomorrow? Unequivocally, the crypto-currency sphere will surprise many more, and if you look at what news outbreaks are happening now, it becomes obvious that market manipulation is in full swing. This is not the end of cryptology, as some people start to think, but only the beginning of the game, but by what rules and under what circumstances it will be conducted - only those who control it know.

There can be two ways out of the situation - to continue to believe in the power of bitcoin or switch to altcoyins. And in that, and in another situation you can earn, if you have a competent approach, but you should pay tribute to the detailed analysis of the market situation. Do not try to guess where the course will go-analyze quotes, events and news background and act back to what the manipulators want from us. In any case, kriptonok still did not see the bottoms, from which it was not possible to return, but for now the situation will clear up, you can go all-in and buy for long or short on short distances.