Bitcoin futures expired on the CME for the first time...
Cryptocurrency traders have been nervously awaiting the expiry of Bitcoin futures contracts on the Chicago Mercantile Exchange. Futures settled just below $11 000 USD, a relatively low value when considering the price of Bitcoin at the time that the contracts opened, yet very close to the current price of Bitcoin.
This presents an important question: is there any true correlation between Bitcoin futures and Bitcoin's actual price? After all, these futures are not settled in Bitcoin - there is no trading of Bitcoin involved in these contracts. They are opened and settled in USD cash. Therefore, the futures contracts have no direct influence on the price of Bitcoin.
Yet, these futures, as of now, appear to have a pretty strong correlation to the price of Bitcoin. If there is a correlation, however, it is merely psychological. The futures have no direct impact on the supply and demand of Bitcoin, but if traders use futures as a gauge of market sentiment, then the projected values may hold sway on buy / sell values.
If this is indeed the case, we should expect only modest growth in the price of Bitcoin. Futures project only small increases of a few hundred dollars in Bitcoin's price over the approaching months.
But do these futures really have any influence? Is it merely coincidental?
It is likely that news of regulation recently emerging from nations such as China, Korea, and India has been lowering the price of Bitcoin. It could be that theft scandals, like today's news about Coincheck's loss of hundreds of millions of dollars in NEM, has suppressed the market. Perhaps, announcements from companies such as Stripe, stating they will no longer accept Bitcoin for payment, could be dampening buyers' spirits.
The cryptocurrency world moves up and down, primarily, on news and speculation. The moment news releases, currencies immediately rise or fall in response. Rumours and anticipation build value, and disappointment causes over-valuations to crumble. It is the positive progress or negative set-backs that seem to hold the most sway over the market.
As futures lose relevancy and more people realise they are, really, a mere side-bet, the advancements and development in blockchain companies will be the true determinant in the values of the market. This is why it so important to do your own research, keep up with news, and get to know the companies behind the coins you want to support.
Following the January blues, attention will soon move back to the technologies, the ideas, the potential, and the excitement of the emerging technologies of this market. The run may not start tomorrow, or even next week, but momentum will build as more and more progress is realised.
Do your research, and be patient.
image source:
https://www.256media.ie/2017/02/what-does-your-sales-funnel-look-like-the-no-bull-version/