3 ms·

I dunno if this is good. Maybe for miners who want to hedge. But seeing how much bitcoin price reacts to news and how relatively easy it is to spread fake news,

I dunno if this is good. Maybe for miners who want to hedge. But seeing how much bitcoin price reacts to news and how relatively easy it is to spread fake news, I think this just creates more incentives for market manipulation. It's pretty hard to manipulate commodity futures prices with fake news but crypto currency market trends are pure psychology

ThrustVectoring 9y ago
That's kind of the advantage of making it easier for the professionals to participate - they have a tendency to react better to news and more accurately price things (since they make giant piles of money if they accurately price things that others mis-price). I suspect that bitcoin futures would damp the volatility in the bitcoin market.
- dharma1 9y ago
  In theory yes, but how do you price bitcoin accurately even as a professional investor? You can't. There's no edge, aside from market manipulation with fake news, and maybe front running with insider news that might affect the price.
  - ThrustVectoring 9y ago
    >how do you price bitcoin accurately even as a professional investor? You can arbitrage the price of mining equipment + electricity vs the cash value of shorting a bitcoin future. Mining rewards are approximately known along with the halving date, mining rigs have a known cost, electricity costs are predictable, etc. Every time BTC futures rise enough above your cost of mining on a risk-adjusted basis, sell more short and expand your mining operation. That's the fundamental pricing dynamic. At least on the short side. The long side makes zero goddamn sense to me, but at least people can place a maximum value based on the forecasted cost of mining and put serious downward pressure on prices that way.
- mathgenius 9y ago
  Nah. CME futures are notorious for increasing volatility. See: the flash crash [1]. And: a bazillion other examples. These "professional" traders aren't playing any kind of fair game. [1] https://en.wikipedia.org/wiki/2010_Flash_Crash https://en.wikipedia.org/wiki/2010_Flash_Crash
skgoa 9y ago
This is going to have little impact on actual Bitcoin. 98% of futures trading is speculative. I.e. it's almost entirely traders betting against each other. The CME is basically a Casino that used the price changes in commodities and other securites to decide winners and loser. What this does change is that it will give Wall Street traders a safe way to trade "Bitcoin".

ThrustVectoring 9y ago

That's kind of the advantage of making it easier for the professionals to participate - they have a tendency to react better to news and more accurately price things (since they make giant piles of money if they accurately price things that others mis-price). I suspect that bitcoin futures would damp the volatility in the bitcoin market.

dharma1 9y ago
In theory yes, but how do you price bitcoin accurately even as a professional investor? You can't. There's no edge, aside from market manipulation with fake news, and maybe front running with insider news that might affect the price.
- ThrustVectoring 9y ago
  >how do you price bitcoin accurately even as a professional investor? You can arbitrage the price of mining equipment + electricity vs the cash value of shorting a bitcoin future. Mining rewards are approximately known along with the halving date, mining rigs have a known cost, electricity costs are predictable, etc. Every time BTC futures rise enough above your cost of mining on a risk-adjusted basis, sell more short and expand your mining operation. That's the fundamental pricing dynamic. At least on the short side. The long side makes zero goddamn sense to me, but at least people can place a maximum value based on the forecasted cost of mining and put serious downward pressure on prices that way.
mathgenius 9y ago
Nah. CME futures are notorious for increasing volatility. See: the flash crash [1]. And: a bazillion other examples. These "professional" traders aren't playing any kind of fair game. [1] https://en.wikipedia.org/wiki/2010_Flash_Crash https://en.wikipedia.org/wiki/2010_Flash_Crash

skgoa 9y ago

This is going to have little impact on actual Bitcoin. 98% of futures trading is speculative. I.e. it's almost entirely traders betting against each other. The CME is basically a Casino that used the price changes in commodities and other securites to decide winners and loser. What this does change is that it will give Wall Street traders a safe way to trade "Bitcoin".