Bitcoin Futures “Too Small” To Influence BTC Value
Bitcoin futures was once pegged as a way to help increase the value of bitcoin. Trading on futures has been a dependable way for many assets to lower volatility and increase their value.
However, many experts are not confident that this will be possible as they believe bitcoin futures are still too small to affect bitcoin prices in any appreciative way. According to data, there are around 1,000 to 2,000 future trades every day on the bitcoin futures market.
The volume of trades is not enough to affect the general level of bitcoin prices.
The bitcoin futures market opened its doors back in December on the Chicago Board Options Exchange (CBOE). Bitcoin futures act like regular futures, with traders getting into deals that would allow them to buy or sell bitcoin at a specific price at a determined point in time. This can lead to great profits or losses depending on how the market behaves.
Futures were already offered in several cryptocurrency exchanges like Bitfinex and Bitmex, but with its presence on the CBOE, regular investors had the option of getting in on the action. All of the CBOE deals are done in fiat currency unlike the futures done on cryptocurrency exchanges, making it more accessible.
When the exchange opened, there was some speculation that bitcoin futures trading would quickly rise in prominence and rapidly increase in scale, given the fact that multi-million dollar deals regularly take place with bitcoin. However, this has not materialized for bitcoin futures and crypto analysts are not confident that this will happen anytime soon.
Bitcoin Futures Causing A Negative Impact?
In a statement, Mati Greenspan, a senior market analyst from eToro said
There were 4,770 contracts traded on Monday, with roughly 23,700 bitcoins. If we work on the then-average price of bitcoin being $6,000, we reach an estimated $142m trading volume for that day. Yes, this was high for futures but compared to some of the exchanges which see billions going through their servers every day it's not that much: maybe 4% of the BTC market
This is bad news for the futures market since a lot of analysts have started to doubt its contribution to the larger bitcoin world. Additionally, rumors are now circulating that the opening of the futures market was what caused the downward slide of bitcoin prices. Data collected from a variety of sources suggests that one of the reasons why bitcoin prices have fallen is because of traders shorting the market, which means that many of them were expecting the price to drop.
Petar has spent the last few years following rise of cyptocurrencies, lending insights to the potential icos coming to market as well as how current currencies are operating. Petar background is in the finance sector and is a banker by trader so money is always on the mind.