Are #Bitcoin Futures Safe Investments?
Are
#Bitcoin Futures Safe Investments?
Market volatility, specially in cryptocurrency is one
if not the main pain points to solve when investing in it. Particularly this
year, Bitcoin has risen to great heights and some say it could still go up. Yet
“band squeezes” tend to alter any kind of predictions.
As of September 20th a breakout could occur at any time
since Bollinger bands on the 1st-day chart are squeezing. The current range between
$10,500 and $9,600 is a reasonable if not “safe” no-trade zone.
Since prices can
go up or down at any given moment, Bitcoin futures are being seen with better
eyes than before. It is good for those who remain highly concerned about the
risks involved in an industry that currently lacks regulation; and it
guarantees an agreed or stable price under a written contract.
“Bitcoin
Futures are an agreement to buy or sell an asset on a specific future date at a
specific price.” -Cointelegraph.com
“Futures
are an agreement between two parties to buy or sell a commodity or financial
instrument on a precise future date at a specified price. When the contract
expires, both parties to the contract must buy and sell at the agreed price –
even if the price of the underlying asset has fallen or risen over time.” -Yahoo! Finance
Cryptocurrency is a tricky market, and knowing how to
proceed and prevent any negative outcome is a must. Like the NYSE rushes to
cover any crack in the financial markets, you should be able to do so or at
least feel secure that your investment can remain safe or be recovered. This
failsafe can fall on Bitcoin Futures’ lap, here’s an example:
“Say baseball bats trade at $1 each, you own a baseball
team and need a high amount of them. You expect the price to go up before
baseball season begins so you buy a two-month futures contract for 2,000 bats
at current prices.
If in 2 months, when the contract expires, the price of
one bat is $2 each, you saved your baseball team $2,000.”
The provider agreed to enter a futures contract to
guarantee itself a steady market for baseball bats during those 2 months. If
the $2 price per baseball bat drops, he is insured; and if the prices rise, he
has already secured $2,000. Both parties are protected against the volatility
of baseball bat prices.
It is the same when applied to Bitcoin, this is a basic
example:
“ If a seller owns one Bitcoin priced at $10000, and he
expects a price drop in the future, for protection, the individual can sell a
Bitcoin futures contract at a current price, which is $10000.
Close to the settlement date date, the price drops as
foreseen. The investor now decides to buy back the Bitcoin futures.
Now the contract is trading for $8000, so by buying it
back the investor has made $2000
The U.S. Commodity Futures Trading Commission (CFTC)
has given the green light to launch
Bitcoin Futures. Bakkt Bitcoin will be the first one to do it in the coming
days, more will follow. Insurance policies for those who invest will be
implemented as well.
Will
Bitcoin futures bring stability to the cryptocurrency market?
About GBT TECHNOLOGIES, S.A
GBT Technologies, S.A., a private Costa Rican corporation (GBT
- http://gbttechnologies.com) is a development-stage company in the business of the
strategic management of BPO (Business Process Outsourcing) digital
communications processing for enterprises and startups; distributed ledger
technology development, AI development and fintech software development and
applications. https://aggregator.genesisexchange.io/ (Beta Version)
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