Home Trading ETFs How Bitcoin Futures are exploiting BTC Price

How Bitcoin Futures are exploiting BTC Price

by TradingETFs.com
Change in market policies, the evolution of similar competitors and new trades such bitcoin futures are proving a threat for the bitcoin prices. 

Bitcoin is going through a dark phase for the last one year. It was on the peak of the crypto market till December 2017. The price of one bitcoin at that time was around $ 19,783. However, then the bear run entered in the crypto space and the price of bitcoin went down.  Also, there are a lot of factors which are actually not good or say devastating for bitcoin price. Change in market policies, the evolution of similar competitors, new trades etc. are proving a threat for the bitcoin prices. 

Let us discuss such a threatening factor for bitcoin price i.e. Bitcoin Futures. We will see how the Bitcoin Futures actually exploit bitcoin price.


1. Bitcoin Futures are easy to be understood by big financial firms:

Most of the big financial firms are well familiar with futures and their exchanges. Wall Street businesses can easily understand the working of Bitcoin Futures. Also, there are easy to be used by these firms. These features of Bitcoin Futures will surely attract these organization to invest a big amount in them. Eventually, it would start acting as a replacement of bitcoin. This all would lead to a drop in interest of bitcoin and finally would act a devastating factor for bitcoin price.


2. Transparent settlement price:

Bitcoin Futures use a transparent settlement price which is missing in case of bitcoin. This settlement price would be treated as a reference price which may not be the precise and perfect but as soon the payment is over, it would be written in contracts. This settlement price could be similar to the reference price for golds in the contracts of jewelry manufacturer and sellers. The presence of this reference will simplify the method of payment in bitcoin.


3. No tension of missing of Bitcoin Futures:

Bitcoin has a long history of losing their bitcoins and private keys. There have been a lot of cases when due to some silly mistakes, folks have lost their significant amount of bitcoins. This is not with the case with Bitcoin Futures. These contracts don’t go missing. Although there are chances that you may lose your money for sure, you can’t lose them by misplacing the Bitcoin Futures contracts. This is a very big advantage of Bitcoin Futures over Bitcoin and these would surely affect the price of bitcoin in a negative way.


4. The creators of Bitcoin Futures are market experts:

Bitcoin and blockchain were developed by technical persons. They didn’t have the adequate knowledge of markets and this was also a reason that bitcoin had to suffer a lot in the market. While on the other hand, Bitcoin Futures are run by market experts. CME and CBOE, both the organization are well known for their knowledge of the market. This is a great advantage with Bitcoin Futures and that is why the experts are predicting that this is not a good sign for bitcoin prices.


5. Bounded by regulations:

However, this feature of Bitcoin Futures would be welcomed by some bitcoin users while some would take this in a negative aspect. Bitcoin is a non-government currency and it has no rules and regulations imposed on it. This is one of the main reasons for the huge investment in bitcoin. On the other hand, Bitcoin Futures are bounded by some regulations. CFTC i.e.  Commodity Futures Trading Commission regulates the trading of Bitcoin Futures. Even though the regulations are very simple ones but it has to be followed by each participating user of Bitcoin Futures. The presence of regulation provides a kind of trust and security in the Bitcoin Futures. This feature of Bitcoin Futures might be appreciated by a few users who are currently using bitcoin. Eventually, bitcoin may lose some of its users and this would lead to further fall of price and market cap of bitcoin in crypto space.


These are few of the factors and features of Bitcoin Futures which might cost the prices of bitcoin a lot. The current user may migrate to it as well as new users may get attracted to these functionalities. This all would lead to a price drop of bitcoin and hence the Bitcoin Futures are actually not good for bitcoin price.

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