Hi!
I'm a bit confused by all the talk about how bitcoin futures will affect bitcoin price.
As far as I understand, a futures contract is a binding agreement between 2 parties where mr A will buy an asset from mr B at a beforehand specified price and time.
The asset can be any commodity like oil etc, and are used both by producers as hedge and by speculators.
It is often possible to settle the agreement directly in cash, without buying/selling the actual underlying asset. I suspect most speculators prefer this option.
So, how will bitcoin futures work?
Will they require buying/selling bitcoin itself or will they just be settled in fiat cash?
I suspect these futures will primarily be used by speculators who probably will prefer to just settle them in cash.
So why would such a contract affect the bitcoin price at all?
I'm new so thanks for taking your time and explaing this to me
I'm a bit confused by all the talk about how bitcoin futures will affect bitcoin price.
As far as I understand, a futures contract is a binding agreement between 2 parties where mr A will buy an asset from mr B at a beforehand specified price and time.
The asset can be any commodity like oil etc, and are used both by producers as hedge and by speculators.
It is often possible to settle the agreement directly in cash, without buying/selling the actual underlying asset. I suspect most speculators prefer this option.
So, how will bitcoin futures work?
Will they require buying/selling bitcoin itself or will they just be settled in fiat cash?
I suspect these futures will primarily be used by speculators who probably will prefer to just settle them in cash.
So why would such a contract affect the bitcoin price at all?
I'm new so thanks for taking your time and explaing this to me
I have heard that they will be cash settled. I dont think you would buy actual Bitcoins (or short actual Bitcoins). I dont know how this will affect the price of actual Bitcoins but is seems that there could be potential for manipulation of the price by doing futures contracts.
This could be good or bad for Bitcoin. Its new territory for us so well find out the ramifications after the contracts are on the market.