The Launch Of Bitcoin Futures

The Chicago Mercantile Exchange is launching "Bitcoin Futures" In just 4 days. If you don't know what this is and how it will impact bitcoin, let me explain.

What is Bitcoin Futures?

"Bitcoin Futures" Allows two people to exchange an asset which is set at a specific price and agree upon a date in the future. So you would go out and buy a "future" for bitcoin for let's say "15000$" and predict the future for it. Let's say that you predict that in the next month bitcoin will reach "16,000$", and it reaches "17,000$" (when the contract expires) then you have made "1000$". You didn't make $2k like the increase of the price, you only made money out of your prediction. 

When buying futures people will be able to settle in cash without even owning bitcoin yourself. This makes bitcoin a lot more attractive to other people who didn't care to get into bitcoin in the first place. That means that Bitcoin Futures will probably bring in a lot more average people to the scene.

Why Will This Be Bad For Bitcoin?

Bitcoin has always been known for its big price volatility, but Bitcoin Futures will unfortunately have a big impact on that. Because of Bitcoin Futures, investors will be able to lock in a price for bitcoin as long as they agree to buy or sell it at that price on a certain day in the future. This will lead to less price volatility just like i wrote. 

Joe Saluzzi, (A Principal for Themis Trading) said that "Bitcoin Futures reminds him of the financial crisis all over again". And he also tweeted out "Remember the CDO wrapper around all those crappy mortgages during the financial crisis? Placing a wrapper doesn't make it safe". 

We will soon be able to see the impact Bitcoin Futures will have on bitcoin. And we don't know yet if it's going to be positive or negative change. But one thing is for sure, Bitcoin is still reaching all time highs regardless of the news.

Thank you for reading <3 @lillieskold