Bitcoin, page-44

  1. 7,424 Posts.
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    @skypiliot

    "So am I correct in thinking that a future contract would no more affect the price of Bitcoin than betting on a horse affects the value of the horse"

    I wouldn't bet on that.

    1. When you have a futures market there is arbitrage. If the price of the futures contract and the "physical" bitcoin get out of line, traders will intervene to exploit the differences, buying one and selling the other to push them back together. So the two markets will most likely trade at the same price.

    2. Futures are cheaper to trade. Because of leverage, futures traders will be able to take larger positions in Bitcoin futures for a same amount of capital deployed by physical traders. Depending on the initial margin requirement imposed by CME, this could be anything up to x10. The experience in other futures market (such as gold and bonds) is that the derivative eventually overtakes the physical as the primary driver of price movements. I expect this may happen in Bitcoin trading.

    The introduction of exchange traded derivatives for cryptocurrencies is a big deal, and over time is likely to change the market fundamentally.

    Cheers
 
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