Do you really know what are futures?
Currently, the futures market is taking a huge part in the cryptocurrencies environment because of the introduction of Bitcoin futures.
Together, we gonna see what are futures, and how they will influence the crypto market.
Futures ... what?
A futures contract is an agreement between two parties to buy or sell an asset at a certain time for a certain price. When you buy a futures contract, that means you are committing to buy an asset for a certain price at a future date. By opposition when you sell a futures contract, you are committing to sell an asset for a certain price at a future date.
Exchanges allows traders to trade anonymously, with the guarantee that the contact will be honored.
You can open a position indifferently by buying or by selling a futures contract. By opposition, you can close your position by buying back or by reselling the same futures contract before the maturity date. In practice, most of the open positions are closed before their expiration.
Before making any transactions, you will need to make a deposit first.
The goal of these futures contracts allows you to buy or to sell any sorts of assets, from the raw materials to the interests rates. The participants on the futures markets can then set today a price for a transaction which will take place in a few weeks or months, it's a coverage.
There's a lot of websites that offer the possibility to trade on a futures markets, but the most famous exchange is the Chicago Mercantile Exchange (CME Group).
Futures and Bitcoin
On the 18th December 2018, CME Group has put Bitcoin futures on his platform, traders can now bet on an increase or decrease of the Bitcoin value. It will allows the holders of Bitcoins to protect themselves against the hazards of the market, immunize them against an increase as well as against a price decrease. We can imagine that most of the new investors of Bitcoin, as they just entered in the cryptoworld, will bet on a future price that will be superior to the actual price. After the Christmas correction, we gonna see a lot more users of Bitcoin around the world and as the value of a cryptocurrency depends on the number of actors, the infamous Bitcoin Bubble is not sentenced to explodes yet.
Peace,
Nassypto.
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