Warrior Trading Blog

Bitcoin Futures Trading Is Here!

bitcoin futures

Bitcoin Futures Trading Is Here!

Bitcoin futures made their big debut on Sunday, December 10th, 2017. The introduction of Bitcoin futures was meant to herald the beginning of widespread acceptance of Bitcoin as a new mainstay of the investing world.

So what exactly is a Bitcoin future and how did Bitcoin’s big debut in the futures market fare? What do Bitcoin futures mean for the future of the world’s most famous cryptocurrency and the world of cryptocurrencies in general?

What Is a Bitcoin Future?

A Bitcoin future is a derivative contract that promises the delivery of a Bitcoin at a future date set out in the contract. For example, if the Bitcoin futures contract is dated for the 17th of January, 2018, then the seller of the contract promises to deliver one Bitcoin to the buyer on that date.

As with most futures contracts, Bitcoin futures are settled in cash, so the seller of the Bitcoin futures contract must pay the buyer the present market price for Bitcoin on the expiry date.

The Bitcoin Futures Market So Far

Futures present the option to short, or bet against, the underlying asset, and many pundits suggested that this first opportunity to go short on Bitcoin would mean that the long-foretold decline in Bitcoin would finally begin. That was far from the case.

Bitcoin futures started off with a large spike in price, followed by a quick retracement down. After this initial opening move, the price rapidly rose at a steady pace for the entire first day, blowing through two circuit-breaker trading stops, before trading was finally halted after a 25% increase for the day.

The Impact of Futures on Bitcoin

So far the long-term impact of futures trading on Bitcoin itself is uncertain. Some people suggest that the option to short will help to smooth the dramatic swings seen in Bitcoin prices. Other people argue that Bitcoin futures will only increase the volatility of Bitcoin prices as more investors enter the cryptocurrency marketplace.

Regardless of what happens, Bitcoin futures have made Bitcoin even more well-known and more accessible to everyday investors.

The future of Bitcoin and Bitcoin derivatives is just beginning, as the addition of alternative investments opens the door to more traders and more complex trading strategies focused on the future path of Bitcoin prices.