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How Futures Contracts Will Affect Bitcoin

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How Futures Contracts Will Affect Bitcoin

Bitcoin impressive run to record highs of $16,000 will face its biggest test in the coming weeks as exchanges open their doors for Futures Derivatives. The crypto currency has been trading in an uptrend, but with the entry of Futures, investors will now be able to play ’both sides’ of the market.

Two Sided Market

A two-sided market is something that has not been put to test when it comes to bitcoin trading. CME Group and CBOE Global markets are set to change the landscape in the coming days in a move that could have significant impact on the crypto currency’s future

The opening of Bitcoin Futures will provide institutional investors and high-speed traders an opportunity to bet on the digital currency’s wild swings. News of the Futures derivatives sent the cryptocurrencies to record highs after registering a record single-day gain of $2,500.

Futures introduce a different type of playing the game. As it stands, the market has rewarded all investors regardless of the number of coins that one owns. However, with the introduction of bitcoin futures big name players are set to enter the game.

The new players have the potential to drive the market down given the amount of money they are set to inject into the market. Futures were designed with a sole purpose of hedging against the risk. They provide one of the surest ways of benefiting when things go bad.

Bitcoin Futures Impact

With Futures, contract miners will be able to get the price for the coins they intend to mine in future. Holders are already doing the same thing as they hedge their downside. As it, stands there is no hedger on the buying side, something that has consistently piled pressure on the downside. The equilibrium has always been met with a strong bull market thus preventing bitcoin from collapsing

The futures contract will make it easy for investors to play both sides of the cryptocurrency market unlike in the past. With the digital currency, trading at record highs on mere speculation there is now a strong reason to be a bear and make a considerable profit by hedging against it.

Bitcoin has experienced volatility never seen before if price gains of up to $2,500 in a day are anything to go by. With the entry of new money from institutional investors, volatility levels could get out of hand, to the disadvantage of a normal investor on the wrong side of a trade.

The volatile nature of bitcoin with the introduction of Futures derivatives could also present another risk for clearing houses which act as middlemen between parties involved in transactions. Wild price swings could make it impossible for smaller brokerage firms to meet their margin calls which would make them to fail.

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Image courtesy of Richie Diesterheft via Flickr

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

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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…

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Bitcoin

Bitcoin Surges After Tesla Bought $1.5 Billion Worth of BTC

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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…

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Altcoins

XNO Token of Xeno NFT Hub listed on Bithumb Korea Exchange

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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…

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