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The Future of Bitcoin is Bitcoin Futures

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Commodity trading has become a niche area in the finance world thathas been gaining more interest among individuals who are seeking alternative trading instruments from the usual stocks and bonds, says Timothy Ho, economics/finance professional.

Commodities categories include precious metals, oil and gas, and soft commodities (cocoa beans, coffee, sugar, wheat, etc.). Some commodities are considered the fifth asset class, and they can include cash, equities, and property.

A futures contract settlement will occur in the future but traded today. There are also spot contracts that settle immediately called spot contracts. Most investors work with a commodities futures broker, someone who understands your financial portfolio goals and can place trades for you for a relatively small fee on futures contracts for your account

Some of the risks of futures trading include:

  1. Exchange rates
  2. Geo political events
  3. Supply and demand
  4. Weather
  5. Leverage and technicals
  6. Price fluctuations

What are Bitcoins?

Bitcoins are the first global decentralized digital currency, which is one of many cryptocurrencies or a virtual currency.Cambridge University says 2.9-5.8 million people are actively using a cryptocurrency wallet, and its more than a fad. Currently, the combined market value of all cryptocurrencies is nearly $40 billion, says Dr. Garrick Hileman, Research Fellow at the Cambridge Centre for Alternative Finance (CCAF). The advent of cryptocurrency has also sparked many new business platforms with sizable valuations of their own, along with new forms of peer-to-peer economic activity.

Trading in Bitcoins Futures

In November 2017, Cannon Trading Futures Vice President Ilan Levy-Meyer wrote, The hot market for today is definitely Bitcoin. While we dont have a future contract YET to trade, it is close and the CME does have the underlying asset which will be the Bitcoin Index (More information will come out soon.). The company included a Bitcoin Index Futures chart for traders to review.

Also in November, the CME Group announced:

Effective Sunday[,] 10 December 2017 for trade date Monday[,] 11 December 2017, and pending all relevant regulatory review periods, please be advised that CME will launch Bitcoin Futures.

It later revised the prediction to read Q4 2107, pending all relevant regulatory review periods.

On Your Mark, Get SetBitcoin Futures Exchange Soon Open for Business

Many investors are concerned with the additional risk of investing in Bitcoin cash futures, with good reason. The value of Bitcoins has risen and dropped like a roller coaster. The reasons seem to be:

  • Lack of confidence in this new commodity
  • It is somewhat shaky reputation
  • Its dramatic reaction to bad news
  • No short selling allowed

Knowing that a futures contract is a tool to hedge positions and lower risk, including spot contracts, traders will assume Bitcoin futures and options will work the same way as other futures contracts. It will, except that when you buy Bitcoin cash futures, they are associated with miners, who also share the risk of unknown Bitcoin futures prices.

Check out some Fast Facts about Bitcoin Mining.

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About the author

Ilan Levy-Mayer has been a commodities broker for over 15 years, and holds an MBA in Finance and Marketing from Hebrew University in Jerusalem. Ilan is currently the Vice President and a Senior Broker at Cannon Trading Company . He is also a CTA of Levex Capital Management and his daily blog was voted the #1 Futures Blog from Trader's Planet.

His experience in the industry dates from the beginning of online trading, and he has also developed several trading systems over the years. In addition, Ilan has written several articles about trading methods and trading psychology, and has been quoted and published several times in SFO magazine, Futures, and Bloomberg. He has been invited to speak at the Chicago Board of Trade, a significant distinction.

Ilan specializes in analyzing the markets based on timing methods, proprietary technical indicators, using support and resistance levels and looking at multiple time frames.

Take a step in the right direction and contact me today, Toll-Free: 800-454-9572 or direct: +310-859-9572. You may also directly e-mail me, Send mail.


Disclaimer: This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading. 

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