Two days before the first Bitcoin futures begin trading Sunday, the case for prices increasing – not decreasing – is looking “very strong”.
Time For ‘Aligning’ High Future Prices
This is according to a summary study of the potential impact of futures on the Bitcoin price by a data scientist writing as Blake C.
Despite Bitcoin shooting up in value this week far in advance of expectations, causing increasing unease, the watershed futures releases will likely only serve to stabilize such higher prices, he argues.
“The answer isn’t clear cut, but I’d argue strongly […] that the CME futures trading will exert positive price pressure on Bitcoin,” the Medium post reads.
Futures markets facilitate price discovery, and once they demonstrate a high future price, arbitrageurs will quickly move to normalise the spot price. Hence, the futures market will help align the current price of Bitcoin to the high future price of Bitcoin.
Experts’ Mixed Bag: Lingham Warns Of ‘Crazy Times’
The higher Bitcoin climbs, the more frequent so-called ‘FUD’ appears from sceptical sources such as mainstream news media and traditional economists.
Among others adopting a conservative perspective was Goldman Sachs CEO Lloyd Blankfein, who most recently described the virtual currency as “not for me.”
However, even Goldman will “clear” the derivatives for “certain clients” upon release, Bloomberg reports today, conspicuously suggesting completely avoiding Bitcoin products is not an option.
“Given that this is a new product, as expected we are evaluating the specifications and risk attributes for the bitcoin futures contracts as part of our standard due diligence process,” a spokeswoman told the publication today.
In equal anticipation meanwhile, investor Trace Meyer echoed Blake C in forecasting what he describes as an “epic battle” between futures providers.
“Equity based hodlers can remain solvent indefinitely,” he continued on Twitter. “There are bounds fiat paper shall not pass & naked short sellers can go back to fiat currency netherworld!”
Epic battle coming between #CFTC naked short futures via @CMEGroup @CBOE & #Bitcoin hodlers. Equity based hodlers can remain solvent indefinitely. There are bounds fiat paper shall not pass & naked short sellers can go back to fiat currency netherworld! 👹 https://t.co/LMUK46rDiy
— Trace Mayer (@TraceMayer) December 7, 2017
Yet not everyone was so sure. Criticism from within cryptocurrency itself has come from Civic CEO Vinny Lingham, who retweeted an article about the futures “threat” with cautionary comments.
“…There is more fiat that hates Bitcoin than loves it,” he wrote Thursday.
Futures will be insightful. Caveat emptor. Crazy times indeed.
What do you think about the impact of Bitcoin futures on prices? Let us know in the comments below!
Images courtesy of Twitter, Shutterstock