Maybe I'm being unduly pessimistic or cynical but ...
Futures seems to work "fairly" with normal stocks. Futures seem to reflect share price movements.
However, with some assets, namely precious metals, futures are used to manipulate the price. Notably, gold is suppressed because banks make huge puts (sell). On an average day, the number of contracts outweigh total gold production for a year. Settlement of futures is either cash or physical gold, but less than 1% or future contracts result in physical delivery.
With zero interest rates, banks can borrow for free and roll over or buy back at contract expiry, with no risk of loss, and sometimes even make a gain. This is called "wash and rinse".
The result is that gold price is pushed down.
Why is this done, and who benefits?
The actors are the Central banks, who don't want gold prices to rise, because it reflects the falling value of fiat currency. Why, after all, do house prices keep rising? Supply and demand to some extent, but realistically, it's a reflection of falling value of fiat currency vs hard assets. After all, house prices don't lend themselves to price manipulation.
Apologies for the long preamble, but what does this have to do with Bitcoin futures?
Bitcoin is rather like gold. Like gold or house prices, it can reflect the devaluation of fiat currency. This is what Central banks fear most.
BC is money, and unlike fiat currency it cannot be directly manipulated through money printing or withdrawal from circulation.
Until now!
With futures contracts, especially when there is no obligation to deliver actual bitcoins, it's possible to create these huge puts on Bitcoin. Inevitably, this could negatively affect the price.
My fear is that futures trading will be hijacked by banks and central banks to suppress the price of BC.
Hope I'm wrong.
Price movement of BTC became slow after the futures contract went live yesterday.
