Futures trading will temper $1K gap on bitcoin

The thousand dollar bitcoin climb continued Wednesday as the crypto moved over $12,000 with its own $1,000+ trading move.

On Thanksgiving Day the conversation around the table was most people asking what bitcoin was and how do you get involved. The price was around $8,600 and that feels like it was a few days ago.

I have to believe the CME move to begin BTC Futures later this month is bringing institutional trading firms into the fold, although many will not admit to entering the fold.

I can see these financial firms being the engine behind the price gaps over the last month as bitcoin moved from $7,000 to $12,700 today (see my updated chart below). I can also see these firms being the ones lending out the crypto in order for the CME to allow shorting of the crypto.

With only 16.7 million bitcoin floating in the marketplace at the most, getting ample inventory to operate a futures market will be difficult in terms of liquidity.

While most YouTube bitcoin “analysts” don’t have a sense of what a futures market entails for bitcoin, the CME has the liquidity to back losses for sometime. They will have a priceĀ  impact along with Nasdaq when it enters the marketplace in early 2018.

I will assume the price gaps will slow appreciably once futures begin trading earnestly in January.

Here are the historical price jumps:

Milestone Date Bitcoin High Days
$1,000 11/28/2013 $1,106.54 1,230
$2,000 5/20/2017 $2,061.88 1,269
$3,000 6/11/2017 $3,025.47 22
$4,000 8/12/2017 $4,009.89 62
$5,000 9/2/2017 $5,013.91 21
$6,000 10/20/2017 $6,064.14 48
$7,000 11/2/2017 $7,355.35 13
$8,000 11/19/2017 $8,101.91 17
$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

11/26/2017

11/28/17

11/29/17

12/6/17

12/6/17

12/6/17

$9,484.91

10,831.05

11,040.20

12,795.20

13,017.96

14,585.26

7

2

1

6

0.4

0.4

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3 thoughts on “Futures trading will temper $1K gap on bitcoin

  1. Both of the Futures contracts announced so far are Cash settled and based on varying baskets of exchange prices but don’t involve any actual Bitcoin. I understand why someone may want to buy some as a hedge before selling the future but there is no reason for them to borrow it to short it. They aren’t selling actual Bitcoin. They are selling a financial derivitive tied to Bitcoin.

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    • Like gold futures there is an option to settle in cash or btc. So either CME may not go into the market to settle the contract depending on price at the time.

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  2. Pingback: CME’s begins BTC options trading on Sunday throwing crypto pricing for a loop | Gray's Economy

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