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Old 12-09-2017, 10:24 AM
 
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Bitcoin futures trading begins tomorrow (Dec 10th). I keep hearing how futures trading will be the death knell for Bitcoin prices. Jim Cramer said yesterday that they will short it to death. Can someone explain this to me?

How would futures trading cause more shorting? Short selling and buying short futures contracts are two different things, right? Futures are derivatives that move based on the underlying commodity's movement, not the other way around. With futures, you do not take delivery of the underlying commodity. I am trying to reconcile this. I understand the concept of hedging, but wouldn't this have a minimal effect on Bitcoin prices?
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Old 12-09-2017, 11:57 AM
 
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Here is a good article:

Let's Talk About Arbitrage - Bitcoin Futures Edition - Kid Dynamite's World

They talk here about the details for the CME futures that start next week, but the idea is the same.
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Old 12-10-2017, 05:26 AM
 
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Great article! Thanks. Best one I've read on the topic.

Still, my take is that Bitcoin Futures have no direct impact on Bitcoin prices, despite the author stating otherwise. An indirect impact occurs only if futures traders buy the underlying commodity. This is clear based on the author's article. All the talk is that institutional traders who were forbidden to trade in Bitcoin will suddenly enter the futures market and short it to death. If that is true, they would need to buy or sell the underlying commodity as well.

Something doesn't jive. Either these institutional traders already owned Bitcoin and will sell into short futures contracts, or they do not own Bitcoin and the futures will not significantly impact the underlying Bitcoin price. That is my take.
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Old 12-10-2017, 07:30 AM
 
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The futures are cash settlement so at no point will anyone trading them actually have to buy or sell Bitcoin so from that perspective no money will flow in or out of actual Bitcoin
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Old 12-10-2017, 10:09 AM
 
Location: All Over
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The futures market will not crash Bitcoin. It's cash settled no actual Bitcoin is purchased. Also there are all types of rules if the market falls 5% it shuts down for something like 2 minutes, 10% shuts down for 20 minutes, 20% shuts down for the day. Contracts are 5 Bitcoins max. Also it's healthy for a market to have downward pressure, without it things can just run way too high way too fast like Bitcoin did up to 20k. Also most people are not gambling on Bitcoin, people like Bitcoin miners who don't know if they will be profitable depending upon price, difficulty and electricity costs can buy futures to hedge their mining business
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Old 12-10-2017, 10:30 AM
 
Location: Texas
5,774 posts, read 6,655,737 times
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Quote:
Originally Posted by doodlemagic View Post
The futures market will not crash Bitcoin. It's cash settled no actual Bitcoin is purchased. Also there are all types of rules if the market falls 5% it shuts down for something like 2 minutes, 10% shuts down for 20 minutes, 20% shuts down for the day. Contracts are 5 Bitcoins max. Also it's healthy for a market to have downward pressure, without it things can just run way too high way too fast like Bitcoin did up to 20k. Also most people are not gambling on Bitcoin, people like Bitcoin miners who don't know if they will be profitable depending upon price, difficulty and electricity costs can buy futures to hedge their mining business
The triggers are 7, 13 & 20% occurring before 3:25pm EST for 15 minutes for the first two and the rest of the day for the third. However, they are MARKET based and use the S&P500 as the reference index for that volatility.
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Old 12-10-2017, 03:08 PM
 
Location: All Over
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Quote:
Originally Posted by txgolfer130 View Post
The triggers are 7, 13 & 20% occurring before 3:25pm EST for 15 minutes for the first two and the rest of the day for the third. However, they are MARKET based and use the S&P500 as the reference index for that volatility.
I didn't feel like Googling the specific numbers but point being it's not going to be as crazy or volatile as people expect imho. THere's protections in place, people can't overleverage themselves and in reality it's healthy to have some downward pressure. If there was a futures market we probably wouldn't have seen Bitcoin run up from what 12k to $19,500 in a single day, although that said we probably woudln't have seen that runup without the speculation of the looming futures market etiher lol
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Old 12-13-2017, 11:26 PM
 
Location: Silicon Valley
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When I was a child, we liked to collect baseball, football and basketball cards. Later on, some people started realizing that some collectors were more into it than others and willing to put down some decent bucks. People started making price guides, and certain cards just started going up and up in value. The random price guides got standardized in Beckett publications. Card stores started popping up like zits on a teenager. Gone was the sole focus on Topps, but other card companies started popping up as well. Eventually, seeing the marketplace, even speculators started coming in, quickly followed by counterfeiters. The hype was building and there was a new game in town.

Later on people started to realize just how much production had gone through the printing presses. Oversupply became rife. Specialty shops stopped buying inventory, and then in turn became forced sellers as they closed up shop. Many large shops scaled back when a simple commodity to sell took on the need for specialization. Collectors felt hopelessly surrounded by too many issues and overall appeal dropped.

To salvage something of the industry, eventually MLB, NFL and the NBA stepped in to start limiting licensing rights, and the small industry remains today. It remains, truly a picture of a player on a piece of cardboard.

Today ICOs are abounding. Those with access to cheap electricity and computers (such as in Venezuela) have found a way to find something of value. Organized crime sees an easier way of transacting funds. CME will trade it, for a hefty transaction fee. Enter the speculators....surely the counterfeiters are on their way.

At the end of the day, just remember a currency's value is being convertible into more goods that something else. True, convertibility is growing....but not as the sole way of purchasing. Another function of currency is to be a stable store of value. These are failing in that aspect. What, if anything, have you known to rise 10,000% in a year. It's well publicized. I have uncles with 0 investing experience asking if I can buy them some.

I don't know who is pumping this up....but for whatever reason, I can't help but think back on how football card prices shot straight up for a year following the release of the first Beckett episodes.
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Old 12-13-2017, 11:34 PM
 
Location: All Over
3,971 posts, read 4,195,107 times
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Quote:
Originally Posted by artillery77 View Post
When I was a child, we liked to collect baseball, football and basketball cards. Later on, some people started realizing that some collectors were more into it than others and willing to put down some decent bucks. People started making price guides, and certain cards just started going up and up in value. The random price guides got standardized in Beckett publications. Card stores started popping up like zits on a teenager. Gone was the sole focus on Topps, but other card companies started popping up as well. Eventually, seeing the marketplace, even speculators started coming in, quickly followed by counterfeiters. The hype was building and there was a new game in town.

Later on people started to realize just how much production had gone through the printing presses. Oversupply became rife. Specialty shops stopped buying inventory, and then in turn became forced sellers as they closed up shop. Many large shops scaled back when a simple commodity to sell took on the need for specialization. Collectors felt hopelessly surrounded by too many issues and overall appeal dropped.

To salvage something of the industry, eventually MLB, NFL and the NBA stepped in to start limiting licensing rights, and the small industry remains today. It remains, truly a picture of a player on a piece of cardboard.

Today ICOs are abounding. Those with access to cheap electricity and computers (such as in Venezuela) have found a way to find something of value. Organized crime sees an easier way of transacting funds. CME will trade it, for a hefty transaction fee. Enter the speculators....surely the counterfeiters are on their way.

At the end of the day, just remember a currency's value is being convertible into more goods that something else. True, convertibility is growing....but not as the sole way of purchasing. Another function of currency is to be a stable store of value. These are failing in that aspect. What, if anything, have you known to rise 10,000% in a year. It's well publicized. I have uncles with 0 investing experience asking if I can buy them some.

I don't know who is pumping this up....but for whatever reason, I can't help but think back on how football card prices shot straight up for a year following the release of the first Beckett episodes.
You have a very eloquent writing style but your post shows you know nothing about cryptocurrency no offense, though I did enjoy the part about sports cards. While I'm no longer a collector I do some business in the space and it's amazing how cards have come back, all these patches and autos and pieces of nascar hoods and players jerseys and such. There's a product comming out this week that's $11,000 per pack and a pack has like 6 cards I believe. Cards were overproduced back in the 90's.

That said comparing cards to Bitcoin is ridiculous. Cards can't be sent across the world digitally, cards cant be divided, cards aren't fungible, cards don't disrupt the finanical industry, cards don't let two people do transactions without 4 corporations in the middle, sports cards don't bring banking to the 94% of the world that is unbanked or underbanked, etc, etc, etc,

Then you talk about counterfeitters, that is mathematically an impossibility
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Old 12-13-2017, 11:43 PM
 
3,182 posts, read 2,811,344 times
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Quote:
Originally Posted by doodlemagic View Post
The futures market will not crash Bitcoin. It's cash settled
Bingo. If it was settled with bitcoin delivery there would be a huge flood of people looking to arbitrage and that would mean heavy betting against continued price increases which in turn would cap the appreciation which in turn would eventually crash bitcoin but since the futures are cash settled that kind of arb is far riskier. I do think bitcoin will crash, but cash-settled futures won't be the ultimate cause.
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