Bitcoin Futures Good Or Bad: A Definitive Guide - Global Coin Report
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Bitcoin Futures Good Or Bad: A Definitive Guide

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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.

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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

As Global Tensions Grow, Bitcoin Price May Go Higher

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BTC Surged Again as A Safe Haven Asset During Global Tensions

  • India – China Border Conflict

After weeks of squabbling and brawling along their long-disputed border, hundreds of Indian and Chinese soldiers engaged in a deadly clash Monday in a river valley that’s part of the region of Ladakh last week. Troops had massed on both sides of the border in recent months in the northern India region of Ladakh and the southwestern Chinese region of Aksai Chin, causing global concerns of a potential escalation between the two.

  • North and South Korea Clash

Last Tuesday, North Korea destroyed the liaison office it jointly operates with South Korea in the city of Kaesong, just north of the demilitarized zone that separates the two countries. 

North Korea also said it would send troops to now-shuttered joint cooperation sites on its territory, reinstall guard posts and resume military drills at front-line areas in a violation of separate 2018 deals with South Korea. Jeong said South Korea will take “immediate, swift and corresponding” steps to any North Korean provocation.

The tensions grown in Asia and the potential “second wave” of coronavirus in the United States may add more difficulties to the global economic recovery. Thus, Bitcoin, as a safe haven asset, attracts more investors to buy and hold. 

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CoinFlip Continues to Dominate the U.S. Cryptocurrency ATM Market

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CoinFlip

Although cryptocurrency has brought in a lot of traders seeking the dream of overnight wealth, cryptocurrency is a lot more than just striking it rich.  Cryptocurrency is about creating a new market with companies that are building cutting edge technology in an effort to continue elevating our way of life.  As the crypto market continues to expand, several companies are involved in creating ways for more people to participate.  One such company that appears to be making all the right moves is CoinFlip.

CoinFlip is the world’s leading cryptocurrency ATM operator that currently allows users to buy and sell 10 different cryptocurrencies including BTC, ETH, LTC, DASH, TRX, KMD, LINK, BNB, XLM, and USDC.  Due to the company’s quick growth, CoinFlip has quickly gained a reputation of being the place to go for all crypto ATM transactions.  In addition to its massive geographic coverage, there are four advantages that CoinFlip currently offers over its competitors:

  • Lowest fees of any cryptocurrency ATM in the world
  • Lightning-fast transactions that are typically completed between 10 and 30 minutes
  • Extremely easy customer verification
  • 24/7 customer support through phone, text, and chat

Given the global pandemic currently facing us, many companies have been struggling just to survive.  CoinFlip, on the other hand, is not only surviving but thriving.  The company has had an exciting few months and has even bigger plans for the future.

Partnership with Monarch Wallet

On May 5th, CoinFlip…

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Cryptocurrency Fraud is Evolving; Bitcoin ATMs Mitigate Risk 

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Cryptocurrency Fraud is Evolving

In one of the more overlooked aspects of the crypto ecosystem, it appears that the bulk of illicit activities are shifting from hacks and thefts to cryptocurrency fraud and scams.

CipherTrace, the crypto-surveillance, and analysis firm released a report at the end of Q4 2019 that revealed hacks and thefts had decreased by 66 percent in 2019 while fraud and misappropriation of funds surged by 533 percent. And beneath the COVID-19 hysteria of 2020, hacks in the crypto sector have been eerily isolated. 

Outside of a few exploited flaws in P2P exchanges and DeFi flash loan vulnerabilities, the headline-grabbing hacks of exchanges for hundreds of millions of dollars have been absent so far this year. Is the industry due for another massive hack, or are stringent KYC/AML processes, regulatory crackdowns, better security practices, and blockchain surveillance working? 

KYC/AML Improvements Are Reducing the Appeal of Crypto Exchange Laundering 

2020 is far removed from the no-KYC wild west days of the early-mid 2010s where anonymous altcoin casinos preponderated and the Dark Underbelly of Cryptocurrency Markets thrived. 

Today, bitcoin and the crypto ecosystem is becoming institutionalized with a surfeit of derivatives (e.g., options, futures, perp swaps, etc.) available on regulated exchanges. 

Most of the leading exchanges adhere to…

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