Will Bitcoin Futures Crash Markets Or Capture $10 Billion In Trade? (2024)

Will Bitcoin Futures Crash Markets Or Capture $10 BillionIn Trade?

The CME (Chicago Mercantile Exchange) Group is set to tentatively launch Bitcoin futures trading this year amid hot debate,not unlike the position and value of the digital currency itself as investors brace for a surge in activity from institutional investors that could reach $10 billion.
At the end of October, CME Group chairman and chief executive Terry Duffy announced the plan to launch Bitcoin futures before the beginning of 2018 which would give institutional investors a way to participate in the booming digital currency space.
There are those in favor, but skeptics believe allowing institutions to short Bitcoin could destabilize markets and create a catastrophe for cryptocurrency investors and traders. Others see it as the beginning of a surge in activity that could lead to $10B in trade.

With BTC nearing $10K per coin, is it too late to participate…or just the beginning?

Even as it zoomed past the $9,000 benchmark this weekend (or perhaps because of its incredibly speedy trajectory), Bitcoin still has its detractors with the likes of JP Morgan’s CEO Jamie Dimon labeling the asset a “fraud” and some experts reflecting concern that its skyrocketing price has all the indications of a speculative bubble. The digital currency has skyrocketed around 906% in volatile trade this year, with three separate corrections of more than 25% all giving way to subsequent rallies. At current prices Bitcoin has a total market capitalization of around $162 billion.

CME’s Duffy noted that his intention was not to control market volatility but to manage the risk by providing a way to short the cryptocurrency.
Short positions are generally considered as a way to balance market forces, enabling investors to bet on gains or declines. To understand shorts, an investor simply “borrows” the asset at a given price and sells it for cash. If the price declines, they repurchase said asset and return it, pocketing the difference. Shorts also allow trading firms to adopt market-neutral strategies, providing the opportunity to finish each trading day even.

RBI cautions users of virtual currencies & Bitcoin
RBI cautions users of Virtual Currencies against Risks
The Reserve Bank of India has today cautioned the users, holders and traders of Virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.
The Reserve Bank has mentioned that it has been looking at the developments relating to certain electronic records claimed to be “Decentralized Digital Currency” or “Virtual Currency” (VCs), such as, Bitcoins, lite coins, bitcoins, doge coins etc., their usage or trading in the country and the various media reports in this regard.
The creation, trading or usage of VCs including Bitcoins, as a medium for payment are not authorised by any central bank or monetary authority. No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities. As such, they may pose several risks to their users, including the following:
VCs being in digital form are stored in digital/electronic media that are called electronic wallets. Therefore, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack etc. Since they are not created by or traded through any authorised central registry or agency, the loss of the e-wallet could result in the permanent loss of the VCs held in them.
Payments by VCs, such as Bitcoins, take place on a peer-to-peer basis without an authorised central agency which regulates such payments. As such, there is no established framework for recourse to customer problems / disputes / charge backs etc.
There is no underlying or backing of any asset for VCs. As such, their value seems to be a matter of speculation. Huge volatility in the value of VCs has been noticed in the recent past. Thus, the users are exposed to potential losses on account of such volatility in value.
It is reported that VCs, such as Bitcoins, are being traded on exchange platforms set up in various jurisdictions whose legal status is also unclear. Hence, the traders of VCs on such platforms are exposed to legal as well as financial risks.
There have been several media reports of the usage of VCs, including Bitcoins, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws.
The Reserve Bank has also stated that it is presently examining the issues associated with the usage, holding and trading of VCs under the extant legal and regulatory framework of the country, including Foreign Exchange and Payment Systems laws and regulations.

RBI cautions users of Virtual Currencies
The Reserve Bank of India had cautioned the users, holders and traders of Virtual Currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to, vide its press release dated December 24, 2013.
The Reserve Bank of India advises that it has not given any licence / authorization to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk.
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