3 ms·
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 t
by 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 agoIn 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 agoNah. 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