Many people are discussing the upcoming launch of Bitcoin futures. How many people will trade them? What is the volume going to be like? How much will the basis to cash be and how much will it fluctuate? Will the arbitragers doing cash crypto arbitrage between exchanges jump into this arb opportunity as well?
All great questions but they can only be answered by the real events that start taking place Sunday night at 6pm EST when the CBOE Bitcoin futures contract begins trading. Once that has happened the likely things that will drive people to trade futures over cash bitcoin are security of funds and fees.
Security is a major concern as there seems to be a theft of funds a couple of times a month from different places and to the interested investor/speculator/trader this is of concern with crypto but not an issue with fiat regulated exchanges. I have not heard of any theft of assets from a brokerage firm or regulated exchange/clearing organization in my 40 years in the space. So the fiat world offering the opportunity to trade crypto assets for cash settlement will be viewed by many as a far safer way to get involved.
Fess are another force that will attract traders to the futures markets for BTC. Typical futures costs for a round turn, buy and offsetting sale are around $8.00 for an active retail trader. When compared on a notional value basis we compare a CBOE 1 BTC contract with BTC value at say $10,000 this comes to .0008. On many crypto exchanges the rate for a trade is .0015 of the value of the crypto traded. This appears to be almost double that of what futures look to be. It is even lower for futures on the CME BTC contract as it 5x the CBOE contract $50,000 notional value with BTC at $10,000 and virtually the same fees as the CBOE so cost would be .00016. Over time the futures are likely to attract a significant amount of volume due to this. It is difficult to tell how much but I expect the volume will grow quickly due partially to these two issues. Time will tell of course so I am excited to see this begin.
The canary in the coalmine is choking get out now
godo while some suggest that this is the end and the bubble will burst soon there does not seem to be a technical pattern that indicates this is the case. Having been a technical trader for over 40 years I am always looking for a technical indication / pattern that indicates a top. The charts are ones best guide for determining an exit scenario. I will continue to keep a vigilant eye on them for the signal.
One other note as far as the canary goes. With the opening of futures markets in this space the number of potential new participants to BTC , always the headline crypto, is significantly increased. Some will sell but I expect there are just as many or more interested that will buy. FCM's will be far more accommodating to buyers as the max downside risk is know at any given time so allowing buy only client access is a good possibility for the small retail type investors.