wry Posted March 17, 2019 #1 Posted March 17, 2019 On Friday the COBE announced they would not issue any more futures contracts for Bitcoin as their current contracts expired. (There are basically quarterly contracts, so they are not issuing a replacement for this March contract that is expiring.) CoBE was the first, by about a week, to offer a Bitcoin Future contract in the USA during the huge run up in price in December 2017. The good news is that their rivals the CME (I'm pretty sure at one time the initials meant something, but those days are long gone) is pressing on full speed with their Bitcoin Futures contracts. As this guy pointed out, it's no big surprise as CME is doing way more volume of trades than CoBE: https://twitter.com/JohnTodaro1/status/1106312949327527936/photo/1 Please keep in mind that in BOTH of these cases, these were CASH settlement contracts. No Bitcoins were ever traded by people buying and selling these contracts. They are essentially just a way to bet on the price of Bitcoin. Given their arrival was tied to the decline in the price of Bitcoin, I'm sort of thinking good riddance! Link to story: https://www.coindesk.com/cme-cboe-bitcoin-futures
Kate Posted March 17, 2019 #2 Posted March 17, 2019 Umm can't really understand what is the purpose of the contract yet. But i can get an idea : Is it like an insurance or something or trading them at a certain price that bitcoin hits ?
wry Posted March 17, 2019 Author #3 Posted March 17, 2019 2 hours ago, Kate said: Umm can't really understand what is the purpose of the contract yet. But i can get an idea : Is it like an insurance or something or trading them at a certain price that bitcoin hits ? I'm happy to explain! What you buy is the obligation or right to buy or sell Bitcoins in the future. Hence it's called a futures contract. However, when the contract expires you don't settle by taking delivery or handing over the Bitcoin, rather one party just gives the other party the cash. So, say right now BTC is @ 4000 USD. You think it's going to go higher, I think it will stay the same or go lower. So you buy from me a futures contract for say 50 USD that is good until June for one BTC @ 4000 USD. Time passes and June gets here and boom, the price of Bitcoin is $5000! So I have to pay you 1000 USD! This is why I say it is like a bet, you don't get or give up BTC, you are just paying cash, hence the term cash settlement. It's a little more complicated with margin requirements and such, but that is it at its core.
cryptjh Posted March 17, 2019 #4 Posted March 17, 2019 I think its good news, the CoBE future contracts, was contracts without any real Bitcoins, so it just a way to inflate the Bitcoins supply. I much better like the upcoming bakkt Bitcoin futures that will involve real Bitcoin.
williamshennie9 Posted March 19, 2019 #5 Posted March 19, 2019 I'm glad to hear this contract has come to an end. Maybe it has something to do with why BTC is now touching the $4,000 mark again?
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