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Topic: Everything you wanted to know about BTC futures but were afraid to ask! - page 5. (Read 4051 times)

legendary
Activity: 2268
Merit: 16328
Fully fledged Merit Cycler - Golden Feather 22-23
This post is the equivalent of this another one regarding options.

I did not realize that you had started two topics that seem to be the same topic, in the same section and in the same language.  Is there some kind of mistake?  Shouldn't one of the threads be locked...? ... sure there could be some kind of a reference in a continuing thread to a locked thread.  Is there a difference between the two threads or some kind of reason that two threads serves some meaningful purpose?

Sorry but I disagree.
Those two topics are different.
This one is aimed at explaining and discussing bitcoin futures.
The other one is aimed at explaining bitcoin options.

Those two instruments are quite complicated financial derivative of bitcoin: future is a linear derivative, meaning its price change with a fixed ratio with the one of bitcoin, while options are non linear derivatives, meaning the price of the option changes in a non linear way with the price of bitcoin.

As this difference involve quite a different approach to pricing and use of those instrument, I decided to open two different thread.
Also this is meant to discuss specific option market taxonomy (volatility, smiles, Greeks) that are irrelevant for futures.

Last bit not least I think having two different thread allows more specific questions about the instrument asked from the forum. As always those threads are meant to learn something.

Hope this clarify and more precisely define my choices.


legendary
Activity: 3892
Merit: 11105
Self-Custody is a right. Say no to"Non-custodial"
This post is the equivalent of this another one regarding options.

I did not realize that you had started two topics that seem to be the same topic, in the same section and in the same language.  Is there some kind of mistake?  Shouldn't one of the threads be locked...? ... sure there could be some kind of a reference in a continuing thread to a locked thread.  Is there a difference between the two threads or some kind of reason that two threads serves some meaningful purpose?
legendary
Activity: 2268
Merit: 16328
Fully fledged Merit Cycler - Golden Feather 22-23
This post is the equivalent of this another one regarding options.

This post analyses how the derivatives market has been positioning itself before the halving. Future posts will monitor this positioning, its evolution, and the general market dynamics after the halving. I hope that we will learn something observing markets before and after this so important moment.

Bitcoin futures are traded in a variety of  flavours at different exchanges. The most liquid exchanges are definitely out of reach for the traditional investors, so l  the analysis will focus on the “traditional” regulated trading venues like CME and BAKKT, which are in the reach of the majority of the investment community, as those are the only venues able to handle their many regulatory and operational requirements.

Bitcoin trading volumes and derivatives open interest have been growing steadily in the last months. CME, and also Bakkt to a lesser degree, have been growing steadily, and their funds inflow was from “institutional investors”, not the whales and private investors trading with leveraged accounts on unregulated exchanges. Open interest is at historical high, after the collapse observed during the mid march market rout: investors reinstated the long positions they had before the crash, and that got liquidated by exchanges - this observation also clears the “derivatives market” as a potential source for bitcoin market crash in these weeks).





From the Commitment of Traders Reports at the CME we see that coming into halving the short leveraged accounts have closed their shorts, while the long have increased their positions.



Regarding the shape of the forward curve, we see that the contango still persists, even if the future curve is way flatter than before the market crash in march, then reducing the profitability of cash and carry trades.

As I said, in a future post I will continue this analysis to see how halving impacted option markets.
hero member
Activity: 1344
Merit: 656
Very nice find.
It’s obviously a typo no one noticed until now. It might be originated from an earlier version of the article referring to different data and probably not correctly updated.
I corrected the text and now should be pretty clear.

Thank you for pointing out.

Anytime.

I was starting to wonder if I missed some easy or complex calculations. Thank you for updating it and thank you for writing it. Now I can go back to reading Smiley.
legendary
Activity: 2268
Merit: 16328
Fully fledged Merit Cycler - Golden Feather 22-23
We are approaching the halving.

Volumes and Open interest at CME are on the rise.
They have completely recovered from the liquidation suffered at the march market crash and are now heading towards new highs.



Actually I expect this figure to decline at Close of business as the  current dump will of course mean long position liquidations.

From the CME COT, lower panel in the following graph, we can see the bulk of the long open interest is the retail investor, who got invested only recently.



I am expecting then this category will be the most hit from this last wave of liquidations.

Interesting times ahead!


EDIT:

Coindesk wrote an article on the same topic:

CME Says Volume Surge Shows Strong Institutional Interest Before Bitcoin Halving

Quote
Open interest – contracts that haven't settled – in both futures and options came in at just under 9,800 (around $423 million-worth of bitcoin) and 555 contracts (roughly $4.8 million) respectively on May 7. Average daily open interest is up 33 percent from where it was this time last year, CME's note said.

"With bitcoin halving set to take place on this week, CME Bitcoin futures and options have seen a ramp-up in trading activity ahead of this major event," the exchange said. "Large open interest holders in Bitcoin futures reached a record of 62 during the week of April 14, reflecting strong institutional interest."




jr. member
Activity: 236
Merit: 6
Very well explained ☺️☺️☺️Thank you so much🥰it's mean every contract we earned $2.50? now I understand why I need more Bitcoin for my daughter's future ..
legendary
Activity: 2268
Merit: 16328
Fully fledged Merit Cycler - Golden Feather 22-23
Very nice find.
It’s obviously a typo no one noticed until now. It might be originated from an earlier version of the article referring to different data and probably not correctly updated.
I corrected the text and now should be pretty clear.

Thank you for pointing out.
hero member
Activity: 1344
Merit: 656
On the CME we get both informations:



On the 25th of September 5,824 contracts were traded on the September expiry, there are a total of 1171 contracts open, 171 less than yesterday close (actually OI are not updated on real times, so both those figures relate to one day before, but you get the concept).

Can anyone please explain how we get these figures

Quote
there are a total of 1171 contracts open, 171 less than yesterday close

from the displayed data?

Thank you
legendary
Activity: 1652
Merit: 4392
Be a bank
The famed Medallion fund of Renaissance technologies hedge fund is poised to enter trading in bitcoin futures.
Not sure if it is bullish or bearish.
https://www.ft.com/content/6ea8207b-b41a-43df-9737-ae481814a8d4
Damn Paywall!
https://archive.is/EIAfy
always search on archive.is
with the ft and many others, you can archive it yourself if no one else has
legendary
Activity: 2268
Merit: 16328
Fully fledged Merit Cycler - Golden Feather 22-23
The famed Medallion fund of Renaissance technologies hedge fund is poised to enter trading in bitcoin futures.
Not sure if it is bullish or bearish.
https://www.ft.com/content/6ea8207b-b41a-43df-9737-ae481814a8d4
Damn Paywall!
legendary
Activity: 3892
Merit: 4331
The famed Medallion fund of Renaissance technologies hedge fund is poised to enter trading in bitcoin futures.
Not sure if it is bullish or bearish.
https://www.ft.com/content/6ea8207b-b41a-43df-9737-ae481814a8d4
legendary
Activity: 3836
Merit: 4969
Doomed to see the future and unable to prevent it
If you want institutional money, if you want big traders money for Bitcoin you can't avoid derivatives...
Moreover futures can be very useful for all the miners, they are able to sell at fixed prices several weeks or months before getting their bitcoins.
And don't forget that most of futures exchanges only accept bitcoins. So you need to buy "real" bitcoins before trading on them.

Why the fuck do you want them involved at all?

This is a revolution of the people, WE don't need nor want them.

Figures don't lie but liars figure. <<<--- that describes the entire institutional banking system and we should not want them involved on the NEW economy.


We were doing just fine until they started their futures market and skimmed the cap and got their greedy little hands in our pie.

You cannot really wish institutional investors away, even if you have preferences for them NOT to be here or not to attempt to manipulate the fuck out of the space.  There are also some people who will not invest into anything except through institutional investors and there are also institutional investors that do not take individuals for clients, unless they have like at least a $million to invest.. Love or hate them, they are increasingly coming to the space, and I look forward to some of them getting reckt, even though in the end, they are likely already going to be able to figure out various ways to hedge in order NOT to get REKT, even if they do not really understand their investment asset (referring to BTC).


You are correct, I cannot wish them away, all I can do is point out why We should not be helping them in any way shape or form and that includes accepting them as inevitable.

When it all boils down they have unlimited funds that are provided by the Fed and obfuscated into the system, the more tools they have to obfuscate those infused funds that dilute the underlying assets value (purchasing power) the easier it is for them to control and hide the process. Therefor by shining a light on their practices and not participating in their schemes is a tertiary act against their actions.

Unfortunately this continues to age well.
legendary
Activity: 2268
Merit: 16328
Fully fledged Merit Cycler - Golden Feather 22-23
A few updates on the thread:

  • Corrected a few minor typos
  • Few minor edits
  • Modified a factual error on Market Efficiency Hypothesis. Efficiency is "semi-strong" rather than "weak".
legendary
Activity: 2268
Merit: 16328
Fully fledged Merit Cycler - Golden Feather 22-23
This post is eligible for my project:


Quote
I am a strong believer in the utility of local boards.
I am lucky enough to be able to express myself in at least a couple of languages, but I know this is not the case for everyone.
A lot of users post only in the local boards because of a variety of reasons  either language or cultural barriers, lack of interest or whatever other reason.
I personally know a lot of very good users (from the italian sections mainly, for obvious reason) who doesn't post in the international sections.

I think all those users they are missing a lot of good contents posted on the international (english) section or on other boards.

If you think you can help here, just visit the thread!

Russian Translation by FontSeli: Bce, чтo вы xoтeли бы знaть o фьючepcax нa BTC
legendary
Activity: 2268
Merit: 16328
Fully fledged Merit Cycler - Golden Feather 22-23
Nice Article today about the importance of Open Interest (despite the slightly click-baitish title):

This Bitcoin Metric Is Over 100% Higher in 2 Months, and It’s Critical for Bulls

Quote
They reported that as of February 13th, the aggregated amount of open interest on Bitcoin futures contracts surpassed $5 billion, with traders on BitMEX, OKEx, Bakkt, CME, and other key platforms throwing billions of dollars at the asset.

This is far above the approximately $4 billion in open interest seen in January of the $2.5 billion in December.

This is especially true when relating to BAKKT open interest, that is, contrary to other exchanges' one, directly converted into physical bitcoin.
legendary
Activity: 2268
Merit: 16328
Fully fledged Merit Cycler - Golden Feather 22-23
This morning I saw  tweet by PlanB

Quote
#bitcoin BTC halving still a non-event on futures markets


https://twitter.com/100trillionUSD/status/1225189897117618182?s=20

Well we saw in the OP how the future curve is shaped.
It has to do with carrying your position untily maturity.
There is no reason why future curve should bend upward after halving, as the spot price is the current best predictor (net of cost of carry) of future prices: if we are sure that the price will move at 100K right after the halving, there is no reason not to buy now.
So the spot price is alwys the best forecast of forward price.

legendary
Activity: 3836
Merit: 4969
Doomed to see the future and unable to prevent it
If you want institutional money, if you want big traders money for Bitcoin you can't avoid derivatives...
Moreover futures can be very useful for all the miners, they are able to sell at fixed prices several weeks or months before getting their bitcoins.
And don't forget that most of futures exchanges only accept bitcoins. So you need to buy "real" bitcoins before trading on them.

Why the fuck do you want them involved at all?

This is a revolution of the people, WE don't need nor want them.

Figures don't lie but liars figure. <<<--- that describes the entire institutional banking system and we should not want them involved on the NEW economy.


We were doing just fine until they started their futures market and skimmed the cap and got their greedy little hands in our pie.

You cannot really wish institutional investors away, even if you have preferences for them NOT to be here or not to attempt to manipulate the fuck out of the space.  There are also some people who will not invest into anything except through institutional investors and there are also institutional investors that do not take individuals for clients, unless they have like at least a $million to invest.. Love or hate them, they are increasingly coming to the space, and I look forward to some of them getting reckt, even though in the end, they are likely already going to be able to figure out various ways to hedge in order NOT to get REKT, even if they do not really understand their investment asset (referring to BTC).


You are correct, I cannot wish them away, all I can do is point out why We should not be helping them in any way shape or form and that includes accepting them as inevitable.

When it all boils down they have unlimited funds that are provided by the Fed and obfuscated into the system, the more tools they have to obfuscate those infused funds that dilute the underlying assets value (purchasing power) the easier it is for them to control and hide the process. Therefor by shining a light on their practices and not participating in their schemes is a tertiary act against their actions.
full member
Activity: 868
Merit: 116
Thanks for this information OP, I  already gave you a merit, you certainly deserve it,  Bitcoin's community should read all of this thread especially the newbies or the beginners, it is really helpful to be honest. Hopefully Bitcoin will have a brilliant future.
Plus,  if you have a lack of knowledge in any domain then you will probably gain nothing, in my opinion, knowledge is the key of successful. Unfortunately, most of users think that Bitcoin's field or crypto is complicated and hard to learn, they always want earn money in an easy way without even a  hardwork, and that cannot happen for sure.
full member
Activity: 1204
Merit: 104
Very often, cryptocurrency users complain about Bitcoin futures, because, in their opinion, before the expiration of fixed-term contracts, the price of Bitcoin reacts to these circumstances and is actively declining.  I couldn’t find a balanced answer anywhere on this question, although it seems to me that trading in Bitcoin futures is much less than the volume of trading in the cryptocurrency market and therefore can not fully influence bitcoin pricing.
hero member
Activity: 2534
Merit: 586
I guess "you" can decide not to take part on it but as long as there is a demand for it they will continue to exist. You can't just create some sort of strike of bitmex or whatever and suddenly try to get people to stop as well, if people are using it they will continue to use it.

All you can do is to hope people will find this as a hype and slowly start to use it less and less eventually leading to the demise of futures but looks like that is not going to happen anytime soon. I agree that futures are the bad part of current financial system and should have never been part of bitcoin itself but at the same time I have nothing I can do about it neither. Hopefully, overtime we will find a way to over-volume these futures and make them not so important in the current system.
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