Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
The weekend of December 16-17, 2017 saw new highs in the bitcoin futures index. Is it a bubble? CNN’s Daniel Shane said bitcoin futures trading “just got a whole lot bigger.” As the bubble got bigger, the warnings got louder.
The involvement of top financial institutions in the bitcoin market underscores its growing mainstream acceptance even as government officials, business leaders, and economists continue to warn people against investing in it. -Daniel Shane
Bitcoin value dropped about $1,000 between December 16-17, and bitcoin cash soared to a record high then lost half its value within that 24-hour period. Taking an average from several exchanges, CME bitcoins futures index must be traded in blocks of five. Opening trades in bitcoin futures on a reputable exchange could calm the nervous bitcoin value volatility. The New York Nasdaq is anticipated to offer bitcoin futures trading in 2018.
Bitcoins are more than a fad, says a recent Cambridge University study of cryptocurrencies. Bitcoins are the world’s first decentralized digital currency, or “virtual currency.” Bitcoins are also called “cryptocurrency,” and what distinguishes them most – aside from being the first virtual money – is they are not administered or managed by a single authority, government or bank.
Bitcoin Futures Trading
Trading bitcoin futures will offer investors some level of protection against major losses due to the commodity’s squirrely fluctuation. Traders are urged to research the bitcoin market and check the dates on blogs and other information because much of the data in November 2017 internet posts about bitcoins were outdated by December 2017. Bitcoins and what we know about them is evolving quickly.
The CME opened trading in bitcoin futures December 18, 2017, a move that gave bitcoins the legitimacy of mainstream trading. Eight hours into the day, the trading was going smoothly as the spot price reached $20,000 and eased back to $18,800. The January 2018 futures price dipped down during the first hours of trading from $19,500 to $19,370, which indicates investors believe bitcoin will hold its value through and into January 2018.
Bitcoin is Becoming a Major Player
Investors feel if a trusted group like CME offers bitcoin futures trading, it validates the commodity’s authenticity. However, CME “also has a track record of getting into some pretty esoteric products,” says Jeremy Grant of strategy+business.com. In 2006, CME initiated a futures contract based on the likelihood of snowfall at various locations. Futures and options based on the weather must’ve made sense to someone at the time . . . and so investors are wondering if bitcoin futures index is a lot like snow.
It might melt.
The bottom line, Grant continues, is bitcoin is not as speculative as snowflakes because the planned futures contract is cash-settled as opposed to physically settled. “Futures traders love cash-settled plays because there’s no need to store or hold a particular commodity or underlying asset to make good on the bet.; it’s a purely financial transaction.” Traditionally, traders do well in a volatile market and bitcoin futures trading is all that.
Are You Ready for Bitcoin Futures Trading?
The online application to open an account for bitcoin and other commodity futures trading takes about 20 minutes to complete; approval is somewhere between 24-48 hours. Cannon Trading Vice President Ilan Levy-Mayer says, “Just like you, we’re excited but cautious about investing in bitcoin futures.” The more we learn, the more you will learn because we keep our clients informed. Trading commodity futures and options involves a substantial risk of loss. Here’s what may influence or add to the volatility of the bitcoins futures index:
- Exchange rates
- Geo political events
- Leverage, technicals
- Price fluctuations
- Supply and demand
Call 310.859.9572, 800.454.9572, or contact us today about commodities futures trading. We’ll always tell you what we know.