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RE: Bitcoin (BTC) Morning Update: Awareness is KEY!!
I'm interested to know if you think that the CBOE future exchange will have a negative effect on the bitcoin price?
It's scheduled to commence training bitcoin futures tomorrow ( Sunday 10 /12 / 2017 at 5 pm )
Many thanks for your anticipated response.
I have read several articles about the futures market. One thing that they all agree on is that the futures markets will result in reduced volatility of BTC (see links). One of them even makes a general statement that the addition of futures markets IN GENERAL results in reduced volatility of the underlying asset, and includes links to academic papers on the topic (some of this is over my head by the way, especially the "futures battle" article!).
5 things about bitcoin futures
futures to end bitcoin mania
bitcoin futures battle
I have made the assumption that a significant proportion (maybe overwhelming proportion) of people in the crypto market, or who will enter the crypto market are speculators. That is, they are looking for returns they can't get elsewhere, and many don't necessarily know very much about the cryptos they invest in.
Then let me put a theory out there: If reduced volatility in BTC does play out, what if that is what finally starts to drive money out of BTC and into the altcoins? I think that many people have stayed in BTC because it has been on such a huge run, and because of the prospect of free coins through forks. Now, the presence of futures could put a lid on BTC volatility, and there are no big planned forks.
So where can speculators find volatility (and therefore opportunity for returns)? In the altcoins. Also, reduced volatility also reduces downside potential for BTC, and therefore could reduce the flight from altcoins during a correction. How would this play out? All of the bullish altcoin/BTC chart patterns, which are in early stages, could outperform altcoin/USD charts. Does that make sense?
Very informative articles. A lot of people here don't understand the Cash Settled nature of these futures.
Also, very good point regarding altcoins. This could be the news that arrives to justify the expected upward explosion.
I had assumed that futures markets would put pressure on supply but now that I have a better understanding of how they will work I can accept that they could reduce volatility. I thought it was interesting that Bitcoin bears and bulls drew the same conclusion on that point. In the short term the futures could lend legitimacy to Bitcoin in the mainstream.