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how futures trading changed bitcoin prices

I'd offer a much simpler explanation. The buzz around Bitcoin reached a critical mass where people at home with no knowledge of cryptocurrencies or blockchain technology suddenly got caught up in a bubble. As the interest increased so did the price so it became a feedback loop. People saw their friends and coworkers talking about huge gains and wanted to get in on it.

Coinbase allowed anyone with a smartphone and a checking account to buy Bitcoin which further drove up the price. Meanwhile the supply was only going up incrementally.

So you had a huge swell in demand and no corresponding increase in supply. This resulted in the price increase. Then when the supply of buyers slowed down there were more sellers than buyers and the price dropped.

This is the most classic form of a bubble and I'm surprised that people are looking for alternate explanations, like the introduction of futures, which I find absurd. If it were so easy to predict a crash simply because you now had a vehicle to short it, everyone would have done so.

There are ways to short most securities that are traded and yet not all securities collapse in value. The author cites two examples of extreme bubbles- the subprime mortgage market and Bitcoin in late and blames the crashes on the creation of vehicles to short them. In reality the mortgage market didn't crash until people started defaulting on debt en masse and the vehicles to short the mortgages existed a long time before the market crashed.

Those bubbles happen regularly in the Bitcoin world. Maybe the futures had some impact, but even without futures a bubble will eventually end in a crash. December was crazy. I had several non-tech friends ask me how to buy Bitcoins. I strongly recommended against buying, but at least one of them still used a leveraged trade on some sketchy platform to buy. I'm against regulation but seeing first hand how financially illiterate people behave I'm not opposed to a minimum level of regulation - e.

But overall, leverage was not what caused the bubble or the majority of the losses. The fact of the matter is that trading is mostly a zero sum game, and your typical emotional, uneducated retail 'investor' doesn't stand much chance of scalping a substantial profit from people and organizations who are either A. You could ban casinos, the lottery system, as well as a number of economically necessities such as credit cards, publicly traded market systems, etc.

So I say, as long as fraud in these markets is punished and disincentivized, there isn't much more to be done. This seems like it may be a victim of the narrative fallacy, trying to make this one simple narrative explain the results of a complex system the bitcoin market.

Everyone has a pet theory as to why bitcoin crashed: regulation, "whales" selling large volumes at once, institutional investors, Futures trading, etc. What's the real reason? It's probably a combination, and almost certainly more complicated that solely "bitcoin futures. The futures market made it so people can have interest in it falling not just hope for more rising. Theres a very legitimate reason why futures market changed the dynamic.

I totally agree. Current pattern is very similar to the four-five previous bubbles, which the author doesn't seem to take into consideration or even be aware of. It really is a waste of time to speculate why bitcoin price is going up or down on such timescale. There are a lot of people in powerful places that want Bitcoin to fail and die.

Futures markets introduced a regulated way for them to make that happen. Buy up a ton of Bitcoin during the lead up to futures trading, then short Bitcoin on the futures market while market selling thousands of the cheaply acquired Bitcoin on spot exchanges. JPMorgan has been using futures markets to manipulate Gold and Silver spot prices for years while also accumulating huge amounts.

It was all planned ahead of time for Wall Street to get maximum profit at the expense of regular people. What else is new. EthanHeilman on May 30, Can't tell if sarcastic or not. Clue: it is sarcastic. If we want to look at the price pair though usd has totally crashed vs bitcoin during the years. And on the converse, there's a number of insiders in the crypto ecosystem, who cheat to prop their investments up. There's a lot of greedy people that want to make BTC cost a lot more then it really should.

But pay no attention to them, blame some boogieman from Wall Street for curbing their enthusiasm. If it weren't for those meddling main stream traders, we'd be going to the moon. So the reality is probably somewhere in the middle. I am aware there are a lot of Bitcoin haters here, but i believe it is the purest form of sound money other than perhaps gold, but that is also debatable. I personally think it should be much higher than what it is priced at today.

Some of the things you state are actually liabilities and some outright falsehoods. And the network gets little real utility from this energy usage. A transaction can take "anywhere from 30 minutes to over 16 hours" to be recorded in the ledger. Bitcoin has been stolen from marketplaces and web wallets with impunity. Even air-gapped storage is not invulnerable. Regular currencies can be double spent too, but rely on trusted intermediaries to step in and reverse the fraudulent transactions.

In a way that is part of what makes Bitcoin so remarkable. That you can transact without having to depend on intermediaries. No, the value is in the fact that what you hold represents a piece of a limited number of coins that will ever exist.

Gold does not increase in value because people are actively spending it to purchase coffee. It is a hedge against inflation. As more US dollars enter the economy and are used for transactions, the value of a single dollar decreases. FWIW the traditional economy: banks, vaults, armored vehicles, money printing, etc uses up far more energy.

Bitcoin actually has the power to introduce innovations to produce cheaper, alternative energy due to mining competition. The lightning network solves this by creating payment channels off chain which can be processed and confirmed in less than a second. It is silly to criticize a software project for inefficiencies now that will be improved upon and changed in the future. This problem also exists with gold, but it is even worse there.

Yes, but the fact that people are trying to steal it in the first place means that they think it is worth something. This is also true of any valuables. Jewelry, diamonds, gold, silver all can be stolen. Bitcoin can be stored in secure vaults or in your head. I've also been thinking about the whole "deflationary" nature of BTC scare quotes intended , and the claims that it leads to an economy that cannot grow the typical standard economics argument for government-controlled currencies.

It seems to me the inherent infinite divisibility might change this? I understand that gold is easily divisible, but couple the logistics of physical coin recalls and I see why that might affect gold and not bitcoin, which, in theory, could just double the precision of the currency with a quick commit. Need to expand the economy, there you go. Perhaps the argument here would be that in a cash-less economy, where all funds are issued digitally by a government, this could also happen? No, because cents are not worth more than 1 dollar.

Increasing divisibility just means you can split existing value into more pieces, it doesn't change the overall amount of value. I think they even stopped pretending that they will pass an audit. I will eat my shoe if they are not breaking their own promise, about tether being backed by USD.

Do you have anything at all to back up this flailing conspiracy theory? Or are you just Roseanne'ing for an audience of true believers? There are also documented case studies of banks paying to fund studies designed to harm crypto currencies or produce content. A lot of the FUD attacks in the media have also been fake in order to create panic selling. These are carefully timed and executed attacks.

The CNBC article. You applied a Fox News worthy amount of spin to what really happened. The central bank of Poland decided to warn its citizens against the dangers of speculating in cryptocurrencies.

The SEC has done the same. The former simply adopted a more creative approach targeted at a high risk population: millenials. Crypto is rampant with fraud. This isn't news. I'm not even sure why you linked the scmp article. Enough said.

It's neither surprising that they concur nor that their opinions were sought within roughly the same timeframe. Buffett and Gates are the two most publicly generous contributors to charitable and philanthropic causes around the world. You decided to call into question the motives of perhaps the two wealthy individuals on this planet who are least likely to have malicious intent, based on the evidence.

As far as I can tell, you're the real shill. Weaponizing a combination of FUD and conspiracy theories to do whatever you can to resuscitate the value of your ill-advised crypto holdings.

how futures trading changed bitcoin prices

What is Bitcoin?

On this page you can find all the Bitcoin Exchanges and Trading Platforms which allow futures trading. Futures are one of the top three derivative contracts, as well as one of the oldest. They were originally developed in order to help farmers secure themselves against changes in the crop prices between planting and the time when they could be harvested and sold on the market. This is the reason why the majority of futures is focused on things such as grains corn and livestock cattle. Of course, the futures market expanded over the course of time and now yrading contract connected to a wide variety of assets, including but not limited to:. A futures contract is a forward hoow with which commodities or financial products are traded at a predetermined price at a specific future date, i. Forward contracts are used on the one chanbed to hedge against price fluctuations.

About Barry Ritholtz

Today I do a market roundup, some brief technical analysis and talk about the San Fransico FED and how their economic theory suggests it was Bitcoin Futures …. Subscribe to our mailing list and get interesting stuff and updates to your email inbox. Learn how to trade cryptocurrencies by taking my brand new online course. I can now buy in at the same price but am not happy that you justify spreading a lie. It would be intersting to pick apart the dynamics of how short sellers of paper contracts would affect the "real" market price. There seems to be a disconnect there and I can't quite understand how it joins up. Not saying it doesn't — I probably need it explained with apples and pears. Thanks for the honesty re.

Cryptocurrency’s sales pitch has been hijacked by its own risks—from extreme volatility to market manipulations, fraud and theft

Currently we have V bottomed so lets not get to excited. What's next? Same as the last one. So wait and see. Ladies and gentlemen, i'm more than happy to celebrate my followers. A big thanks to everyone who supports my free work. For how futures trading changed bitcoin prices great occasion, here is a new BTC chart, ftures hope you will enjoy it. It's been a long time since I published a BTC chart. For my french followers, there is a french video in 2 part on TradingView which has been working well since Taking a look at the 4hr CME chart.

I see we just completed a gap between and Lets see if it gets filled. CME price inefficiency in these levels adds confluence to this view. Except one! Pricse Traders! Will this gap get filled sooner rather than later? Points to consider, - Trend Bearish trding Price testing. I wonder how CME will open there is a closing price of a decent gap short is priority. But chanhed is a cryptocurrency market, and whatever bicoin want to happen, put a stop loss.

Looking for bounce to 7. Outlook: The downtrend is still in play. RSI is hitting oversold conditions. All these factors may add to thinking that Bitcoin could see a minor pump to retest the down-line resistance and filling up the gap.

Futures Chart. Videos. Top authors: BTC1! Last visit. BTC let's fill changfd gap and short it. Bitcoin CME gap filled. Bitcoin RR. I have often noticed that this kind of figure, it is often bulli. All CME Gaps filled. FTG: Bitcoin. Bitcoin: Downtrend in play.

BTC vs Silver. Show More Ideas. Related Symbols. For Business. Made. From the creators of MultiCharts. Got it.

Bitcoin Futures for Dummies - Explained with CLEAR Examples!

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Miners disempower themselves by competing. This is a very difficult question, and we do not pretend to be able to forecast bitcoin prices, nor will we futurse any guesses. The horizontal axis represents the number of days before and after the peak dates. We know that bitcoin is used as a means of exchange in a number of markets. Very rarely will the hashrate effect price Miners have no say in what is a valid transaction. With falling prices, pessimists started to make money on their bets, fueling further short selling and further downward pressure on prices. Often an instant classic and must-read for. If one were able short bitcoin, or one how futures trading changed bitcoin prices to deliver or receive bitcoin on tract expiry, that would create downward pressure. Financial Markets. It is a hedge against inflation.

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