Connect with us

Bitcoin

Bitcoin Futures Good Or Bad: A Definitive Guide

Published

on

We are just a matter of days away from bitcoin futures being made available as tradable assets by CME and CBOE, which are launching their markets on Dec. 10 and Dec. 18. respectively.

Take a look through some of the crypto specific discussion sites and read some of the more popular news outlets in the sector and you will see an overwhelmingly positive response to these above-mentioned launches. That bitcoin futures will be available to trade must surely be a good thing from a long-term adoption perspective, right?

Well, yes and no.

There is a downside to the situation that many of the optimists seem to be ignoring and it’s one that might temper a bullish attitude somewhat at initial presentation. As we will get to shortly, however, even this might not be enough to stop the launch of bitcoin futures propelling price higher longer term.

In order to explain what we are talking about, it’s first important to talk a little bit about what futures are and, specifically, their implementation in this space.

A futures contract is a contract that stipulates that an individual will buy or sell a particular asset for a set price on a specific date in the future. In the commodities markets, farmers deal in futures as a hedge against the risk of falling prices in the commodity they produce (say, corn) while, on the other side of the equation, companies like airline operators deal in futures to hedge against the risk of an increase in the price of fuel for their aircraft.

These are just two examples, of course, but what’s important to realize is that the ability to buy and sell futures contracts means that money can be made on both sides of the market. Right now, it’s pretty difficult to short sell bitcoin and there’s basically no market for it on the bitcoin cash market. This means that the vast majority of positions are incentivized to push the market price of bitcoin upwards.

Once there is an active futures market for bitcoin, however, there is an incentive on the short side of the equation as well as on the long side. This means that there is potential for large gains to be made as price falls and, in turn, opens up bitcoin to potential manipulation on the short side, as we see in many of today’s more traditional financial asset markets.

The fact that it will soon be far easier to short bitcoin, therefore, is a major concern and one that many aren’t really considering right now.

With that said, however, an active futures market also makes it easier to go long bitcoin than is the case currently, and this is where the bullish counter argument comes in.

A large number of people want to gain exposure to the price rise we have seen in bitcoin over the last 12 months but have been unable to do so because buying and storing bitcoin is pretty inconvenient. Outside of these individuals, there are also large numbers of financial institutions that would likely love to pick up a position but that don’t want to have to go through the process of holding it in cold storage (and are, as a result, put off by the limited security offered by online wallets).

With the advent of bitcoin futures, these parties are able to take long positions (i.e. take positions in the expectation that price will rise going forward) without having to tackle any of these above-mentioned barriers.

As such, there is a strong chance that the inflow of speculative buy activity that comes about as a result of barriers to entry into the market being removed will outweigh the impact of bitcoin futures allowing certain parties to take up short side positions on the asset’s future.

To put this another way, it’s about to become a lot easier to go short bitcoin but it’s also about to become a bit easier to go long bitcoin.

We’re willing to bet that the number of participants that will enter based on the former altered situation is far smaller than the number that will enter based on the latter (i.e., the number of longs is going to dramatically outweigh the number of shorts) and, in turn, the net impact of a bitcoin futures market on the price of the underlying asset will be very much bullish.

We will be updating our subscribers as soon as we know more. For the latest on bitcoin, sign up below!

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

 

Bitcoin

Blockchain technology outshines Bitcoin and Gold during global pandemic

Published

on

As the popularity of cryptocurrencies such as Bitcoin begins to level up with investments made in metals such as Gold, together they have both made significant advantages for investors who have taken a leap to invest in them.

However, thanks to the pandemic and the dynamic shift in investing and the economy, many investors have seen fluctuating losses and gains thanks to the uncertainty of the current business world. 

Many investors that backed companies who have exposure to blockchain technology have seen an approximate amount of 54% return on investments over the past year. This is even after considering how hard the global tech market and companies have been hit since the beginning of the pandemic.

What is blockchain technology?

Blockchain technology was first introduced as a supportive technology for Bitcoin. A blockchain is a simple, unchangeable and un-hackable digital ledger that holds transactions in little blocks attached to a chain. The transaction is duplicated and distributed across the entire network of systems on the blockchain, making it available for everyone on the network to see. 

Each block in the chain contains various transactions which are recorded on the participant ledger every time a transaction takes place. The database is decentralised and is managed by multiple participants known as Distributed Ledger Technology (DLT).

Although blockchain technology was birthed from Bitcoin and was widely adopted for the use of cryptocurrencies, the way it works and its security has made…

Continue Reading

Bitcoin

Bitcoin Surges After Tesla Bought $1.5 Billion Worth of BTC

Published

on

Cryptocurrency

The sudden rise of Bitcoin has been connected to the decision taken by the Tesla electric car company to buy $1.5 billion worth of Bitcoin.

The company explained in a filing with the Securities and Exchange Commission (SEC) that it bought Bitcoin to diversify its cash returns and more flexibility.

Musk’s Tweets also impacted Dogecoin’s price

Tesla also added that it will start accepting Bitcoin payments for all its products, although this will be based on a limited basis and applicable laws. If the company concludes and starts accepting cryptocurrency, it will make it the first major car manufacturer to accept Bitcoin payments. The company’s founder and Chief Executive Officer Elon Musk has developed an interest in Bitcoin and cryptocurrencies.

He has been tweeting severally about the viability of the Dogecoin (DOGE), which doesn’t have an important market value attached to it.

Few hours after endorsing Dogecoin, the cryptocurrency rose by an impressive 50%. But regulatory authorities are still concerned about the risks in cryptocurrency investments, with several regulatory bodies warning traders and investors they could lose all their money from crypto investments.

But for Tesla, the company decides to diversify its funds and increased its cash returns. However, Tesla also warned investors about the volatility of Bitcoin’s price in its SEC filing. According to the SEC…

Continue Reading

Altcoins

XNO Token of Xeno NFT Hub listed on Bithumb Korea Exchange

Published

on

Hong Kong, Hong Kong, 25th January, 2021, // ChainWire //

Xeno Holdings Limited (xno.live ), a blockchain solutions company based in Hong Kong, has announced the listing of its ecosystem utility token XNO on the ‘Bithumb Korea’ cryptocurrency exchange on January 21st 2021.

Xeno NFT Hub (market.xno.live ), developed by Xeno Holdings, enables easy minting of digital items into NFTs while also providing a marketplace where anyone can securely trade NFTs.

The Xeno NFT Hub project team includes former members of the technology project Yosemite X based in San Francisco and professionals such as Gabby Dizon who is a games industry expert and NFT space influencer based in Southeast Asia.

NFT(Non-Fungible Token) technology has recently gained huge focus in the blockchain arena and beyond, making waves in the online gaming sector, the art world, and the digital copyrights industry in recent years. The strongest feature of NFTs is that “NFTs are unique digital assets that cannot be replaced or forged”. Unlike fungible tokens such as Bitcoin or Ether, NFTs are not interchangeable for other tokens of the same type but instead each NFT has a unique value and specific information that cannot be replaced. This fact makes NFTs the perfect solution to record and prove ownership of digital and real-world items like works of art, game items, limited-edition collectibles, and more.

NFTs are already being actively traded in markets globally. For…

Continue Reading

Press Release