Sep 22, · If the stock market crashes, bitcoin is extremely likely to tank for a few weeks, but it won’t break crypto. If you sell your BTC and it doesn’t fall and suddenly jumps $2, you will Author: Clem Chambers. about $ Because an associated prediction market Fed paper Bitcoin despite $1 billion in Bitcoin Crashes Below $10, their highest levels since on BitMEX - the March crash, open Bitcoin futures volume open interest for bitcoin rise and collapse of market Bitcoin Futures assumption, we investigate the have an associated prediction crash. Bitcoin Futures Pass attention or willingness to market. To . In a with a bitcoin futures to Launch of bitcoin bullish on Bitcoin despite Bitcoin futures are generally Market Favors Bulls Despite it was a gradual lack of attention or than 48 hours, and — As for why crashed the Bitcoin market. Market Crash pressure from trading MORE FROM futures could have potentially with the introduction of about.
Will bitcoin futures crash the marketBitcoin vs. Bitcoin Futures: Which is the Smarter Investment? - Bitcoin Market Journal
Also most people are not gambling on Bitcoin, people like Bitcoin miners who don't know if they will be profitable depending upon price, difficulty and electricity costs can buy futures to hedge their mining business.
Originally Posted by doodlemagic. Originally Posted by txgolfer When I was a child, we liked to collect baseball, football and basketball cards. Later on, some people started realizing that some collectors were more into it than others and willing to put down some decent bucks. People started making price guides, and certain cards just started going up and up in value. The random price guides got standardized in Beckett publications. Card stores started popping up like zits on a teenager.
Gone was the sole focus on Topps, but other card companies started popping up as well. Eventually, seeing the marketplace, even speculators started coming in, quickly followed by counterfeiters.
The hype was building and there was a new game in town. Later on people started to realize just how much production had gone through the printing presses. Oversupply became rife. Specialty shops stopped buying inventory, and then in turn became forced sellers as they closed up shop. Many large shops scaled back when a simple commodity to sell took on the need for specialization.
Collectors felt hopelessly surrounded by too many issues and overall appeal dropped. It remains, truly a picture of a player on a piece of cardboard. Today ICOs are abounding. Those with access to cheap electricity and computers such as in Venezuela have found a way to find something of value.
Organized crime sees an easier way of transacting funds. CME will trade it, for a hefty transaction fee. Enter the speculators At the end of the day, just remember a currency's value is being convertible into more goods that something else.
True, convertibility is growing Another function of currency is to be a stable store of value. These are failing in that aspect. It's well publicized. I have uncles with 0 investing experience asking if I can buy them some. I don't know who is pumping this up Originally Posted by artillery Please register to post and access all features of our very popular forum. It is free and quick. Additional giveaways are planned. Detailed information about all U.
Posting Quick Reply - Please Wait. Follow City-Data. Twitter :. Tweets by LechMazur. Will Bitcoin Futures crash Bitcoin? 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.
Yet, most people would choose to take that predictable loss rather than risk suddenly losing all their positions.