Topic: Bitcoin bubble & trading of Bitcoin futures (Read 137 times)
i think the author is trying to imply that because of the futures bitcoin price dropped. it practically is saying it when it says price went up, futures started then it fell! but it had little to do with it, the $20k bubble would have happened without futures and it will not reduce the volatility whatsoever. the market will be the same as before and the volatility will go down just because the market is growing not because of futures.
"Until recently, it was easy enough to take a long position, but expensive and risky to bet against the cryptocurrency. Things really changed in December, when U.S. regulators allowed the trading of Bitcoin futures. That move came in the middle of a historic runup in the price of Bitcoin and other cryptocurrencies. But as soon as futures contracts began to trade, an interesting thing happened -- futures prices suggested that Bitcoin’s growth would slow.
The huge surge in demand for Bitcoin both inflated the bubble and caused a demand for a futures market.
What happened next is historic. Bitcoin’s price crashed from a high of about $19,000 to less than $7,000.
It mirrors the result of a 2006 paper by economists Charles Noussair and Steven Tucker, who introduced a futures market into a trading experiment:
"We find that when futures markets are present, bubbles do not occur in [our experimental asset] markets. The futures markets seem to reduce the speculation and the decision errors that appear to give rise to price bubbles in experimental asset markets."
Source: https://www.bloomberg.com/view/articles/2018-04-10/bitcoin-was-prone-to-bubbles-until-bears-could-bet-against-it
The huge surge in demand for Bitcoin both inflated the bubble and caused a demand for a futures market.
What happened next is historic. Bitcoin’s price crashed from a high of about $19,000 to less than $7,000.
It mirrors the result of a 2006 paper by economists Charles Noussair and Steven Tucker, who introduced a futures market into a trading experiment:
"We find that when futures markets are present, bubbles do not occur in [our experimental asset] markets. The futures markets seem to reduce the speculation and the decision errors that appear to give rise to price bubbles in experimental asset markets."
Source: https://www.bloomberg.com/view/articles/2018-04-10/bitcoin-was-prone-to-bubbles-until-bears-could-bet-against-it
The value of bitcoin at 20k dollars is undeniably an overvalue. That is why since there is an overvalue it will not last long until it finally be corrected. Some call the overvalue of bitcoin as a bubble and when it pops the price of bitcoin crashed down to 6700$. Though there are many who lost huge profit due to their investment at 20k$ but as long as they will not sell their bitcoin until it recovers then they will not lose their capital and still has a possibility of gaining profits when bitcoin overtakes 20k$ next year.
"Until recently, it was easy enough to take a long position, but expensive and risky to bet against the cryptocurrency. Things really changed in December, when U.S. regulators allowed the trading of Bitcoin futures. That move came in the middle of a historic runup in the price of Bitcoin and other cryptocurrencies. But as soon as futures contracts began to trade, an interesting thing happened -- futures prices suggested that Bitcoin’s growth would slow.
The huge surge in demand for Bitcoin both inflated the bubble and caused a demand for a futures market.
What happened next is historic. Bitcoin’s price crashed from a high of about $19,000 to less than $7,000.
It mirrors the result of a 2006 paper by economists Charles Noussair and Steven Tucker, who introduced a futures market into a trading experiment:
"We find that when futures markets are present, bubbles do not occur in [our experimental asset] markets. The futures markets seem to reduce the speculation and the decision errors that appear to give rise to price bubbles in experimental asset markets."
Source: https://www.bloomberg.com/view/articles/2018-04-10/bitcoin-was-prone-to-bubbles-until-bears-could-bet-against-it
The huge surge in demand for Bitcoin both inflated the bubble and caused a demand for a futures market.
What happened next is historic. Bitcoin’s price crashed from a high of about $19,000 to less than $7,000.
It mirrors the result of a 2006 paper by economists Charles Noussair and Steven Tucker, who introduced a futures market into a trading experiment:
"We find that when futures markets are present, bubbles do not occur in [our experimental asset] markets. The futures markets seem to reduce the speculation and the decision errors that appear to give rise to price bubbles in experimental asset markets."
Source: https://www.bloomberg.com/view/articles/2018-04-10/bitcoin-was-prone-to-bubbles-until-bears-could-bet-against-it
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