If we say that Bitcoin does not stop in the last week,. After Bitcoin crossed the 10 thousand $ limit, it almost went away. With the increase it experienced in the last week, Bitcoin, which stood up to the $ 19 thousand limit in some stock markets, fell to around $ 13,500 after a while, and of course, comments such as Bitcoin “bubble” appeared.
However, after that drop, futures trading started.. With the CBOE launching Bitcoin futures, the price of Bitcoin has increased again and currently stands at $ 17 thousand.
Some investors are worried about the slightest drop and sell their Bitcoins.. However, it may be necessary to get used to such small decreases and increases.. BitMEX CEO Arthur Hayes thinks that such situations will intense and tighten with the new futures market opening this week.
Old Money Enters
Concerning futures As we have said in many of the articles we have published, these transactions will enable traditional investors to trade Bitcoin without “dirty” their hands and without “risking” themselves.. It is estimated that a very serious amount of money will enter the futures market, especially with the CME starting these transactions on December 18.. Especially with the CME, this is thought to happen because the CME is much larger than the CBOE.. The total market cap of the crypto money market has exceeded $460 billion, but even this is a bummer when compared to some global markets.. So when Wall Street is involved there will be much bigger fluctuations.
Hayes commented on the subject:
“First of all, these contracts by their very nature, they will increase the volatility of Bitcoin.”
Instant Cash Conversion
Why would these transactions increase the volatility of Bitcoin? Currently, there is some discussion about manipulations in the market with futures.. The inclusion of futures in an already volatile market, whose structure is also favorable, can exacerbate the situation.. Hayes:
“Let’s look at an example. CME contracts will be closed on weekends. So the price will close on Friday and reopen on Sunday night just like any other Globex futures contract.. It will have an upper and lower limit of 20%. This means that a contract with a duration longer than 24 hours cannot be traded at or below 20% of the price that closes at 16:00 London time on Friday.”
“Let’s take the case of Bitcoin Cash.. Bitcoin price drops 30% between Friday and Sunday. CME contract lower limit triggered so no one can trade. From the point of view of the exchanges, there may be a situation where a certain group of investors will want to cash in on their contracts because they do not have enough collateral to cover the losses they will suffer from the contracts by opening the exchange instantly.”
There are other problems that can lead to sudden changes:
“At the same time, there is the fact that half of the exchanges in their index are almost illiquid and their exchanges are experiencing technical problems, even with today’s busyness.. You can also see a situation where a bad guy can DDOS the stock market and change the price before settling in to affect the trading of futures contracts and how brokers convert money to their clients.. It will be interesting to see.”
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