Article Last updated on: 17-09-2019
Wondering to know the reason behind the Bitcoin futures trading? If yes, then, you are absolutely in the perfect place.
We all know that Bitcoin is the hottest and most trending subject of discussion among the people nowadays, especially youth of the current generation, and so, it is very obvious to have inquisitive to know that how bitcoin futures could burst the cryptocurrency’s bubble.
Let us have a brief discussion over it.
Bitcoin and Chicago board of exchange:
When the Chicago Board of exchange became the first major derivative to exchange to launch Bitcoin futures on December 10, then, the endless Bitcoin mania became more attractive. When the price movements were excessive, then, trading was halted twice due to CBOE speed breakers.
The Chicago Mercantile Exchange(CME) group followed the launch of Bitcoin futures at CBOE. Nasdaq is also preparing for a similar launch in the second-half of 2018.
Bitcoins futures allow traders to conjecture about the price of Bitcoin later. Let us consider a real-life situation, the January contract for Bitcoin was trading around US$18,300, up from an opening price of US$15,000. Along with Bitcoin, you can also use altcoins for margin trading, for instance you can trade ripple futures on exchanges like Delta.
At the launch of the futures, there was such a high enthusiasm that the Bitcoin price touched an all-time high of US$17,382.64 after one day of CBOE trading. After hearing this, bitcoin lovers may feel very happy, but it could lead to failure for the cryptocurrency for a long run.
It would probably have been possible that bitcoin future may end up lowering the price of Bitcoin. Future trading brings a number of new choices for the investors to bet against Bitcoin and also allows them to settle the contracts in dollars.
Though the crypto futures is new to the people as well as market, we must be aware of the futures contract trading dates back to ancient times.
In 1750 BC in Mesopotamia the Babylonian king, Hammurabi, introduced a legal code, the code consisted stipulations for trading goods at a future date for an agreed-upon price.
A good contract can easily be understood in terms of buying and selling an asset at a future date at the decided amount. One party to the contract agrees to buy a given quantity of the asset (such as stocks or bonds) or commodities (oil, gold, Bitcoin), and take the delivery on a future date while the other party agrees to deliver the asset.
Here come some new terms, “Hedgers” and “Speculators”. These both are involved in future markets. Hedgers are concerned about saving and protecting themselves from future price drops, they buy or sell the asset. They lock the price of the commodity at no risk of dropping it.
On the other hand, speculators make assumptions. They assume the possible risks. In case if the market goes against them, then, they will lose more than that if they have earned.
The rise of Bitcoins and other cryptocurrencies:
One of the most trending and popular stories of 2017 was a drastic rise in Bitcoin, not only Bitcoins, Other forms of cryptocurrencies as well.
At the beginning of the year 2017, the cost of bitcoin was still under $1,000 before beginning a meteoric rise that would peak in December at just under $20,000. Then, the price of bitcoin and other cryptocurrencies fell off. In 2018 alone, bitcoin prices started at $12,000, spiked to above $17,000, dropped down to just a shade over $7,000, before rising back to $10,000.
Because of continuous rise and fall of the price of cryptocurrencies, some believers such as Xapo CEO Wences Casares predicts that bitcoin prices could go as high as $1 million while the investor Warren Buffett believes cryptocurrencies will not have a good ending.
Well, nothing can be predicted according to the current scenario as nobody knows the future. There may or may not be a good ending of cryptocurrencies, this is something beyond assumption as well as imagination.
So, this was all about Bitcoin futures and how Bitcoin futures trading could burst the cryptocurrency’s bubble.
Here, we covered all the necessary details regarding the subject such as CBOE plans and decisions, future lessons, the rise of Bitcoins and other cryptocurrencies and some other assumptions and predictions related to bitcoin futures.
We tried our best to give you all the required details about the Bitcoins futures. If you still have any doubts or queries, just feel free to contact and ask us. If you have some other details regarding the subject or some other assumptions which you think can be a part of the content, must share with us. It will be good to have a two-way conversation.
Hope the content must have helped you.