Has Bitcoin Futures Trading Affected the Bitcoin Price?
On November 2017, the Chicago Board Options Exchange (CBOE), announced plans to introduce Bitcoin futures trading. With the addition of Bitcoin Futures, CBOE and CME have both positively endorsed cryptocurrencies. This was announced with a lot of hype, and many speculated that it was the start of the integration of cryptocurrencies into legitimate institutions. Once it was released, Bitcoin began getting media attention and adoption by many institutions, igniting the rise to it’s all-time high of $19,900. Needless to say, the current Bitcoin price has since retraced significantly. While many blame Bitcoins fall to the $6.000-$13.000 range due to the lack of traditional fundamentals and overhype, some question whether Bitcoin futures played a role in the current Bitcoin price downturn.
Bitcoin Futures Director Calls Futures Trading a Success
As far as CBOE’s Bitcoin futures director Dennis O’Callahan is concerned, offering futures trading has proved phenomenally successful. In fact, in a recent interview with Bitcoin news website CoinTelegraph, O’Callahan revealed that on average, CBOE creates 7,000 new Bitcoin futures contracts per day.
Have Bitcoin Futures Positively or Negatively Affected Bitcoin Prices?
At present, Bitcoin futures contracts have only been trading for about half a year. This being the case, it is not possible (at present) to say that its effect on the Bitcoin price has been anything but positive. Of course, many cryptocurrency commentators believe that by allowing futures, institutional traders now have the option to bet against Bitcoin and blame this as the main reason for our steep dive. While this is true, this was not an underlying reason why these events occurred. While Bitcoin futures might have accelerated this process, it was bound to happen either way.
Will Bitcoin Futures Contracts Influence Bitcoin Prices in Future?
Will Bitcoin futures contracts grow on traders over time? If Bitcoin starts a new bull run toward $20,000, a resurgence in interest Bitcoin overall. And answering this question frankly, yes. Once Bitcoin gets back into the financial medias spotlight many will flock back. Bitcoin futures contracts offered by CBOE and CME Group did boom briefly. With the start of CBOE futures the price of Bitcoin jumped 2.000 points and moving on further as Bitcoin prices rallied toward $20,000 in early January. What is more, this was because it was clear that Bitcoin was going to correct at some point. Traders, therefore, used Bitcoin futures to bet against continued rises and profit as prices did start to adjust. Of course, the idea of betting against the Bitcoin price is tantamount to heresy for many digital currency investors. In reality, however, traders will likely only use futures contracts to bet against future Bitcoin bull runs. What this shouldn’t do, though, is impact Bitcoin prices significantly (or even negatively) unless thousands of new traders suddenly start coming to market all at once.
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