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Monday, September 23, 2019

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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