Do bitcoin futures make the bitcoin price crash?
First i'm not a native English speaker, so sorry for my bad English. But I will share my opinion and idea here and I like to see how other people think about this.
In the upcomming weeks future trading for the Bitcoin will be possible. December 18th CME Group, the largest derivates exchange in the world will launch bitcoin futures. And also the Chicago Board Option Exchange and BATS Global Market will open future trading on the 10th of december.
The bitcoin price is going up a lot lately also because of people speculating about big investors like banks that can buy Bitcoin. That's the wrong idea. Banks can buy the futures, but with futures you're not buying any bitcoin at all. Futures are financial contracts obligating the buyer to purschase a physical commodity or financial instrument at a predetermined future date and price. The futures may call for a physical delivery of the asset, but others are settled in cash like the bitcoin futures and thats in my opinion a big problem for the bitcoin. Because when futures are bought they won't buy an real bitcoin!
Now the big problem..
Why would new people or big investors buy bitcoins on unsafe exchanges or use wallets and risking to lose there bitcoin when they just can buy bitcoin futures? And think about all the institutions that already bought the bitcoin they maybe will sell it to buy safe futures. So a lot of potential bitcoin buyers will buy futures instead. But when you buy a future, you're not buying any bitcoin, so the trading volume on the bitcoin will go down instead of up. That makes the price of the actual bitcoin lower.
At the moment a lot of people thinking there will be a huge demand on bitcoin if the future trading become active, but actually it isn't, it's probably the opposite.
So the final thing to think about. The future market for gold is more than 10 times bigger than the real gold market.
In the upcomming weeks future trading for the Bitcoin will be possible. December 18th CME Group, the largest derivates exchange in the world will launch bitcoin futures. And also the Chicago Board Option Exchange and BATS Global Market will open future trading on the 10th of december.
The bitcoin price is going up a lot lately also because of people speculating about big investors like banks that can buy Bitcoin. That's the wrong idea. Banks can buy the futures, but with futures you're not buying any bitcoin at all. Futures are financial contracts obligating the buyer to purschase a physical commodity or financial instrument at a predetermined future date and price. The futures may call for a physical delivery of the asset, but others are settled in cash like the bitcoin futures and thats in my opinion a big problem for the bitcoin. Because when futures are bought they won't buy an real bitcoin!
Now the big problem..
Why would new people or big investors buy bitcoins on unsafe exchanges or use wallets and risking to lose there bitcoin when they just can buy bitcoin futures? And think about all the institutions that already bought the bitcoin they maybe will sell it to buy safe futures. So a lot of potential bitcoin buyers will buy futures instead. But when you buy a future, you're not buying any bitcoin, so the trading volume on the bitcoin will go down instead of up. That makes the price of the actual bitcoin lower.
At the moment a lot of people thinking there will be a huge demand on bitcoin if the future trading become active, but actually it isn't, it's probably the opposite.
So the final thing to think about. The future market for gold is more than 10 times bigger than the real gold market.
Note
The thing where I'm worried about is the best to explain with an simple example.Let's say there 100 people who own bitcoins and in this example there only 100 bitcoins in the world. All the 100 people put 100 dollar in the bitcoins, so that makes the bitcoin price 100 dollar with a total marketcap of 10,000usd. Now when the bitcoin futures are launched 50 of the 100 people want to buy the futures instead of the bitcoin, because it's saver and easier. If there 50 futures it will make the future price 100 dollar. On the otherhand the real bitcoin lost 50% of his volume this makes a marketcap of 5,000 usd and the price of the real bitcoin 50 usd. Ofcourse this is an extreme scenario, but good for explaining.
And there is another extreme threat. People think banks and big corportations will buy the bitcoins. But if they're smart they would do the opposit. They maybe already bought a lot of the bitcoins. So they pushed the bitcoin price up a lot, but with the upcomming futures, they could sell all there bitcoins and in the same time open shorts on the bitcoin futures and let it crash big time, so they take double profit. Banks don't like the bitcoin. Why would they want a concurrent?
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.