Bitcoin, Futures & the Exchange: How to proceed

In an interview, NASDAQ CEO Adena Friedman gave details of plans for CME’s own futures program. Meanwhile, CME’s first round of futures is coming to an end. A look back.

In principle, they could not be more different: On the one hand a new crypto currency, designed for decentralisation and anonymity, on the other hand a traditional centralised institution and its instruments. As already in December CBOE and CME, NASDAQ now also wants to profit from Bitcoin with futures contracts.

In an interview with CNBC, Adena Friedman gave details of the futures contracts announced in November. As the interview shows, the company wants to set itself apart from the competition with its own futures programme.

While the futures of CBOE and CME focus on the price and its development, Nasdaq wants to shift this focus. It is much more of an investment than a tracking system. The main motivation she cites is the “network” effect and assumes that gradually more people want to enter the crypto business in order not to lose the connection.

However, there was no precise date and no definite decision about the Bitcoin revolution

While at the launch of the futures in December it was criticized that they were not well thought out, NASDAQ apparently wants to make sure: “We continue to keep a close eye on risk management and make sure we use the right Bitcoin revolution. We also make sure that the contracts are different from those that are already on the market”. Ultimately, however, we want to wait and see whether there is enough demand for the products. Looking back at the development of the Bitcoin revolution futures so far, this need – at least theoretically – seems to exist.

The launch of the first round of futures began on December 10 last year, with Bitcoin trading at $15,000. When the futures expired on 17 January, the price was 11,000 US dollars, as can be seen from the price trend.

CME’s second round of futures started on 18 December. At this time, the price was at the all-time high of 20,000 US dollars, which had not been beaten before. It has not yet come to an end – to be precise by 26 January.

In order to bring the whole thing into connection with the price development and possible profits, we would like to briefly remind you again of how futures contracts work. Anyone who “bets” on a price loss in the futures, is doing so-called shorting. In doing so, one agrees to buy a fixed quantity of a commodity at an agreed price at a certain point in time.

If you now have the right little hand, you can profit twice with this Bitcoin revolution

Those who buy at a favourable price can sell at a high price according to the review by onlinebetrug. If you sell at a high price, you can bet that the price will fall again. After the futures have expired, the Bitcoin revolution starts all over again: If the price then rises again, you can theoretically take it ad absurdum. All you have to do is bet correctly.

As chance would have it, the stars for experienced brokers were quite favorable for the right use shortly before, after and during the start of the futures.

So let’s play through the most favourable scenario for investors. Theoretically, he could have bought himself sometime before the start of the CBOE futures or even on the day of the launch. He would then have been able to buy short, betting that the price would fall again by 17 January (keyword: bloodbath). At the same time, that person would have sold again shortly afterwards, preferably at an all-time high, and thus reaped a first profit.

As luck would have it, the hitherto unbeaten all-time high of almost 20,000 US dollars coincides with the start of the second futures round on 18 December. If that lucky person had had his profit paid out, the first profit would have been reaped.

If they had then shorted again with the launch of the CME futures (possibly from profit), this person would presumably also go back with profits from history – provided that the price does not rise again to 20,000 US dollars by the day after tomorrow. If the price development follows this logic, the price would rise again after the expiration of the CME futures, i.e. on 26 January. Then the second CME round will start.

Surely there is a lot of conjunctive talk here, you have to be careful not to wear the aluminium hat on your head soon. But with so much correlation, it’s worth at least describing them. Aluhut or not: It remains exciting.