Dec 17, · BTC.1 | A complete Bitcoin (CME) Front Month futures overview by MarketWatch. View the futures and commodity market news, futures pricing and futures trading. Next Level Trading with Cryptocurrency Futures Bitcoin and digital assets are volatile investments. Many traders attempt to manage their risk simply by buying an asset when the price drops or selling it when the price goes up. The downside of this tactic is that oftentimes money is left on the table after you leave the market. Bitcoin futures market data, including CME and Cboe Global Markets Bitcoin futures, quotes, charts, news and analysis. Bitcoin and other cryptocurrency and altcoin prices (Ethereum, LiteCoin, Ripple, Dash, IOTA). Historical Bitcoin prices and API access via Barchart OnDemand.
Futures market on bitcoinFour Problems With Bitcoin Futures
This degree of price fluctuation is virtually unheard of in the stock market but is trumped by other major assets such as soybeans 10 to 75 percent , crude oil This is a baked-in feature of the commodities market, due in part to relatively inelastic supply and pricing based primarily on market demand.
While this model works quite well in the steadier stock market, it would prove difficult on a commodities exchange. The price of coffee alone has fluctuated by more than percent in the past 10 years.
In the past year, it has jumped by 12 percent before diving by 30 percent, before ticking back up by five. Trying to resell a barrel of coffee beans as a traditional investor would be problematic. This uncertainty is inherent to bitcoin trading as well since the market is driven by a considerable level of speculation.
To deal with this, commodities traders rely on futures contracts. A futures contract allows the trader to invest specifically in volatility. Instead of having to predict the right price at which to sell, a futures trader invests in price direction. For instance, in buying bitcoin outright, a trader would have to choose a purchase price and then decide at what price to sell.
Both of these involve precise decision-making and timing. This is tremendously difficult to pull off in the unpredictable bitcoin market. A futures contract would allow a trader to peg a future price point. At the time of writing, bitcoin has a day volatility estimate of 3.
In raw terms, the price of a single bitcoin has swung by thousands of dollars within the last year. This makes it hard to predict how and when, exactly, to sell your bitcoin. As with all commodities, the risk is always there. If you sell too soon, you may miss out on riches; sell too late and you may take a bloodbath. A futures contract helps with that as it does not cap potential gains.
Trades are made on direction and volatility, not price prediction. There are few, if any, easy ways to make money off falling prices when you hold an altcoin. For this reason, markets like bitcoin tend toward speculation bubbles. Traders only have one option: buy low and hope to sell high, creating a speculation feedback loop which inflates the value of the altcoin.
For a highly volatile asset, this opens up far more opportunities to profit. The altcoin market crash in December might have been inevitable. However, if there had been short positions in place, perhaps losses could have been mitigated.
Short positions create an entire investor class built around breaking speculation feedback loops. This allows them to profit from downward price swings as well as bring an overly exuberant market back to its senses. In hedging, investors buy future positions against their current holdings. It is similar to taking out an insurance policy. If the route to your workplace is accident-prone and you pass through that area every day, you will want to protect your car from the risk of accident liabilities.
Therefore, you hedge it by taking out vehicle insurance. In the bitcoin world, an investor buying bitcoin would also buy short positions against the asset, while someone selling their bitcoin would accompany that sale with a long contract.
This allows the individual to hedge his or her bets against future market movements. With that being said, there is a trade-off in hedging your bitcoins since hedging is not free. You should carefully consider whether trading in bitcoin futures is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances.
Please note that virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Virtual currencies are sometimes exchanged for U. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional fiat currencies. Profits and losses related to this volatility are amplified in margined futures contracts.
I want to trade bitcoin futures. Can I be enabled right now? In addition to futures approval on your account, clients who wish to trade bitcoin futures must receive the CFTC and NFA advisories on virtual currencies provided below.
How can I check my account for qualifications and permissions? Am I able to trade bitcoin? We offer the ability to trade bitcoin futures contracts, much like we offer futures contracts for gold, corn, crude oil, etc. Fair pricing with no hidden fees or complicated pricing structures. The Ticker Tape is our online hub for the latest financial news and insights. Here are a few suggested articles about bitcoin:. Bitcoin and Cryptocurrency Understanding the Basics.
For additional information on bitcoin, we recommend visiting the CFTC virtual currency resource center. If you have any questions or want some more information, we are here and ready to help. Get answers on demand via Facebook Messenger. Tweet us your questions to get real-time answers. Prefer one-to-one contact? Send us an email and we'll get in touch. Home Investment Products Futures Bitcoin.
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