What Has the Futures Market Done to Bitcoin?
As many of you are aware, the CBOE and CME Group launched Bitcoin futures on December 10th and December 17th respectively. This was the beginning of a new step for Bitcoin as it is now publically traded through futures. Although the futures contracts are set up to be settled through cash, it still looks like there has been an effect on Bitcoin prices now that Wall Street has officially entered the game.
When Bitcoin futures opened through the CBOE group December 10th, 2017, Bitcoin was trading at roughly $15,612. Within a few days, the price then rose all the way up to $19,900 to $20,000 depending on what exchange you were on. It appeared that the bulls were sending a message to Wall Street bears.
December 17th, 2017 when the CME Group (bigger volume) launched their futures, Bitcoin was trading around $18,774.50. Since that date, Bitcoin has gone on a downtrend. Could it be that Wall Street is truly setting up for ‘the big short?’ It looks like the bear market has begun for Bitcoin as we are currently on week 4 of the downward trend. People are speculative on how long this could last, however.
There are some possibilities other than Wall Street entering the space for the struggle. There has been a recent boom in alt-coins (short for alternative coins) which could be a factor in Bitcoins slugglish past month. Bitcoin is still up 1,537% on the year, which is a tremendous trade that is holding its value quite well. Alos, there has been a rise in Ethereum (ETH), which is now trading around $1,300 USD. ETH is a rival of Bitcoin, and it is being used more an more to develop some of these alt-coins. Just in November and December of 2017, it was a big feat for Bitcoin to trade at 10K. The fact that the 10K mark hasn’t been sniffed could mean that the uptrend is still in tact.
Futures contracts are settled on this Wednesday January 17th. Many in the space are skeptical about what will happen to the price, because manipulation can happen due to so called ‘whales.’
What does Charlie Lee have to say?
Charlie Lee (@SatoshiLite) was quoted on Twitter with this tweet January 1st, 2017 :
This is extremely low volume. Cboe futures settlement is based on Gemini auction price. This is easily manipulated, so I would be wary of trading BTC near settlement time of 1/17 4pm ET. Note: CME futures settlement is based on an index of exchanges. Much harder to manipulate.
What Charlie Lee is suggesting is the CBOE futures price is subject to high manipulation because the price is based off of one exchange. This could lead to settlements that may not be favorable for the consumer investor.
My personal opinion on the matter at hand – I believe that Bitcoin holders may have their hand caught in the cookie jar. I think it could get worse, before it does get better. A parabolic run up can only last so long, before it is brought back down. Take a look at the Tronix (TRX) chart. Comparing the two is apples to oranges, however. Cryptocurrency is here to stay, whatever the price may be. However, Wall Street wants some of the action, first.
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