THE MARKET OF BITCOIN FUTURES CME CAN BENEFIT THE "BEARS"

One of the reasons for the success of people who made only long-term investments in the bitcoin market is the lack of an effective way to sell large amounts of bitcoins for a period without coverage (ie "short-sail" or "short"). One of the authors of the Cointelegraph website believes that within a month all this can change if CME realizes its idea of ​​bitcoin futures.

BTC FUTURES CME

Bitcoin's price went up when the CME announced the release of bitcoin futures, scheduled for December 2017. It was expected that these financial instruments will make the class of assets legal. The latter, in turn, should have led to an influx of institutional investors into the Bitcoin market. In case of approval of bitcoin futures by CTFC, the US Securities and Exchange Commission would be difficult to block the traded index bitcoins (also known as Bitcoin ETFs), because there would be a regulated asset in the basis.

However, it is not a fact that investors would have caught the most important thing. The appearance of bitcoin futures would provide "bears" (traders expecting a drop in asset prices) a way to "short" huge amounts of bitcoins. Today, such luxury is not too accessible to them.

Terry Duffy, chairman and CEO of CME, in a conversation with CNBC said:

Today you can not" short "Bitcoin. Therefore, there is only one way of dealing: you either buy or sell [crypto currency] to others. Thanks to this, a two-sided market is being created, and I think this is always much more effective.

MARGINAL TRADING ON STOCK EXCHANGES

Technically, today you can "shorten" Bitcoin on existing exchanges with the help of margin trading. However, there is not enough liquidity and volumes, if we talk about large investors. Banks such as Bitfinex allow one user to borrow digital tokens and sell them, provided that others agree to lend the assets to the marginal trader.

But there are quite a few such exchanges - most offer only ordinary sales and purchases, which is beneficial to traditional long-term investors. In addition, many exchanges (the same Bitfinex, for example) do not allow US citizens to conduct margin trading on their platform. Regulated same futures - it's quite another matter, since such transactions are supported by cash, so short-sellers do not have to take bitcoins in debt.

"BEARS," BEWARE!

Bitcoin futures are able to provide skeptics a way to "short" the crypto currency, but this does not mean that such a trading strategy will be successful. Given the high volatility of Bitcoin and the propensity for sudden take-offs, futures can easily become a "bear trap" instead of making the players "teeth" drop sharper. Even Jamie Dimon, who called Bitcoin a deception and a bubble, said that he would not "short" him. Here is a quote from his conversation with CNBC in September 2017:

I'm not saying that you have to shorten. Bitcoin can reach up to $ 100,000 before it starts to fall. This is clearly not what people should be advised.

So beware, "bears". If there is something more complex than defining a "bubble", then this is clearly a calculation of the time when it bursts.