Futures is a contract to purchase or sell an asset on a specific date in the future and at a specific price. Both parties that have come to an agreement have to abide by that agreement and by abide, it means that they are only able to sell or buy at the dates set. Bitcoin is a cryptocurrency that can be used to trade, buy or sell. In December 2017 Bitcoin Futures was launched by Cboe Global Markets Inc and CME Group Inc. Bitcoin has grown tremendously in recent years and has become too big for investors to ignore so exchanges have developed new ways to trade it.
Bitcoin formed together with futures are contracts that are based around Bitcoin whereby someone is able to determine what the price of the cryptocurrency will be in the future. This is something quite similar to, for example, spread betting via City Index and other reputable platforms.
So that futures allow investors the chance to take a risk on the price of Bitcoin without having actually owned any of it. Plus, Bitcoin futures are regulated whereas Bitcoin is not; so this means that people are able to trade Bitcoin futures on regulated exchanges.
There are certain fields in which Bitcoin is banned from being traded but with Bitcoin Futures investors are allowed to still gamble on what the price of Bitcoin will be, and it helps investors gain the confidence to invest. Established investors are more likely to offer Bitcoin futures to their customers because it’s a more feasible investment decision. It also allows for more liquidity in the crypto market because it helps the process of buying, selling and trading a lot more profitable.
So that, Bitcoin futures also helps increase the number of investors because it’s a broader market and includes countries where Bitcoin has been banned. Futures balance out variations of fundamental assets, thus it also could make the price of Bitcoin less unstable. Bitcoin is the most well-known cryptocurrency so if the price of Bitcoin increases because of Bitcoin futures; more of us will notice the crypto currency industry.
This would benefit the blockchain industry as a whole because other alt coins could also see a rise in their prices and be traded as futures as well. Bitcoin futures can be traded on two separate platforms. They would be BitMex and OkCoin, the second would be to trade on publicly regulated exchanges. Since futures were introduced the price of Bitcoin has increased; which has suggested that more people want to be invested in Bitcoin long term rather than short term. But those who wish to be invested in it long term also want to be invested in Bitcoin without owning it, so that its risk free.
Therefore, it does look very positive in the world of Bitcoin futures. There are many who believe that, like many other new ideas and technologies; this type of futures will have solid place in mainstream financial markets.