How Bitcoin Futures' products affected the cryptocurrency markets in 2018

Finance

A year has passed since the beginning of the CBOE XBT futures contracts and the CME Group derivative bitcoin products launched last December. With the super-bearish prices of the last few months, much has changed since the economy of cryptocurrency has reached the historical highs on the spot markets. Meanwhile, bitcoin futures contracts have increased and some skeptics continue to believe that these derivative products are disruptive to spot cryptocurrency prices.

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Bitcoin spot price of the & # 39; products tame & # 39; of the Futures products?

A few weeks before the launch of the bitcoin-based futures contracts of Cboe and CME Group, the price of bitcoin core (BTC) increased significantly. After the launch of Cboe, seven days later, the cryptocurrency reached an all-time high of $ 19,600 per currency and since then the value has run out. On the opposite side of the spectrum, as the price of BTC has declined on many occasions, bitcoin derivative volumes on CME and Cboe have skyrocketed. A recent one ECM liquidity report for December 7, bitcoin futures volumes met in November, just before the price was destined to suffer heavy losses. The same can be said for the month of October as CME's BTC futures contracts have seen significant average daily volume growth (ADV). ADV Statistics of Cboe shows the exact same pattern in all the false traps and subsequent landfills throughout the year.

The skeptics think and believe that the futures markets have caused the long-term crypt-crisis and think that futures "fix the price of BTC". Many believe that when precious metals derivatives (PMs) were first introduced, they defined and suppressed the price of PM such as gold and silver. Bitcoiners will also remember that the president emeritus of CME Leo Melamed said Reuters the futures markets would have "tamed" the BTC last year.

"We will regulate, make bitcoin not wild or wild, and we will tame it in a regular type of exchange with the rules", said the prominent figure of the CME group.

Reproduction of spot markets with shorts with lever

The bear market that followed the launch of the bitcoin futures markets has led people to wonder if derivative players are manipulating spot prices. Big players such as state actors and financial institutions could buy BTC through the wide range of spot trades and follow up on this by placing short leveraged positions in CBOE and ECM contracts.

Just like Chinese miners who say they are late with BTC at this time, time traders who buy from spot markets can slowly put these coins back on the market and are protected by term hedging. This same type of manipulation happened years ago with the precious metals markets and now there is an overwhelming amount of paper products that are exchanged with respect to physical resources.

This week, both the CME and Cboe markets are processing around 3,500-7,000 ADV contracts and have seen more substantial ADV on certain days before a market change. For example, on November 20, CME Group's bitcoin contracts reached a maximum of 14,490. Coincidentally, the volume of CBOE's XBT futures on the same day coincides with the CME Group ADV. It is noteworthy that the spot price of BTC fell from $ 4,670 per coin to $ 3,600 over the five days following the peak of contracts with the CME Group bitcoins.

In addition, bitcoin futures forecasts have changed significantly since December 2017, when people kept betting between $ 20,000 and $ 50,000. Instead, contracts today for December, January and February are between $ 3,200-3,500, making Blocktower Capital, and Ari Paul's BTC bet seems to have passed. In fact, the Ledger X contract that bet the price of BTC would have touched $ 50K by December 28th was sold for a quick prize that day. Ledger X president, Juthica Chou He said the sale of options made about the "25 percent" premium above the spot price at the time.

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Other Bitcoin Futures products will be available soon

It is still early to say whether bitcoin futures are negatively affecting spot prices, but skeptics have stated that markets like these are not profitable for cryptocurrency since they were announced. In addition to the bitcoin derivatives of Cboe and CME, other giant financial institutions are joining in the fun. The vice president of the Nasdaq media team, Joseph Christinat, he told the press that Nasdaq will launch its bitcoin-based futures in the first half of 2019. Then the Intercontinental Exchange revealed that Bakkt would launch its bitcoin derivative products on December 12, but delayed the launch. Now Bakkt hopes it will start selling products January 24th and the contracts will be different from CBOE and ECM futures. Bakkt plans to exchange its products in US dollars, but according to reports, each trade "will result in physically delivered bitcoins".

What do you think of the effect of bitcoin futures markets on spot cryptocurrency prices? Let us know what you think of this topic in the comments section below.

Images via Shutterstock, CME, Cboe and Trading View.

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