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Breaking the Code behind Bitcoin Futures: What are Bitcoin Futures?
Bitcoin dropped below 4000$ once again, but the VP of Nasdaq media group claims that the “turmoil” in the market won’t affect the plans for adding Bitcoin futures to the second largest stock market.
The futures should become available already in the first quarter of the next year 2019, representing a major product for Nasdaq according to Joseph Christinat, the vice president of Nasdaq media group. However, the details on whether the futures will be physical or backed with cash are not available yet.
Although adding Bitcoin futures to NASDAQ market is a huge deal given the status of this stock exchange in the world of trading, this isn’t the first of Bitcoin futures we have seen.
Back in December of 2017, Bitcoin futures became available on CBOE (Chicago Board Options Exchange) which is considered to be the biggest and the top option exchange in the US.
Moreover, the same year in December, the Bitcoin futures also came to CME, expanding the market based on blockchain beyond the cryptocurrency marketplace.
At the same time, Bakkt announced the issuance of physical Bitcoin futures that should be out probably already by 2019 in January.
But, what exactly Bitcoin futures represent and can BTC futures affect Bitcoin in the market?
What are Bitcoin Futures?
In the terms of adoption of Bitcoin, Bitcoin futures can practically do nothing. This is because investors who decide to bet on Bitcoin futures don’t actually have to own Bitcoin.
So, in a nutshell, Bitcoin futures provide an opportunity for investors to bet on what the next price of Bitcoin will be without having to physically own Bitcoin.
What is the main catch with Bitcoin futures, unlike Bitcoin, which is the first and the top cryptocurrency, is the fact that Bitcoin futures are regulated in oppose to Bitcoin while speculating on the price of BTC through Bitcoin futures is legal even in countries where Bitcoin-related operations are considered to be against the law.
How Does Bitcoin Futures Work?
Bitcoin futures actually doesn’t have anything to do with cryptocurrencies or blockchain for that matter since the entire concept of Bitcoin futures matches the traditional concept of operating futures.
That means that the investors will speculate on the potential price of Bitcoin whether regarding a short run or a long run while looking for a profit. In reality, this process is not affecting the price of Bitcoin in the cryptocurrency market.
How Can Bitcoin Futures Affect Bitcoin (BTC)?
Even though Bitcoin futures and Bitcoin (BTC) are not actually related, the profit of speculators does depend on the price movement of BTC as their profit depends on their bet that BTC will be worth a certain price within a certain period of time.
It may also be the case that some of the big time investors (speculators) decide to manipulate the price of Bitcoin in the cryptocurrency market so that it would match the futures bet they have made, that way ensuring a profit through Bitcoin futures.
There are also indications that the price of BTC went through a significant rise back in 2017 in December when CBOE and CME decided to add Bitcoin futures.