Topic: using futures to offset short term losses (Read 295 times)

But, unlike other futures which are contracts for a transacting a good or service at a certain quality and quantity at a future date, am I understanding my research correctly which states in bitcoin futures there is actually no future transaction that occurs for actual bitcoin, but only a cash settled "bet" ?

The price on futures is based on Gemini exchange prices, not the other way around.

They just potentialize the current price, be it up or down.

The only way you cannot be scammed is if you hold your own private keys, because it's the only way to know that what you hold, will not disappear (given proper security measures taken).

It's obvious that the trust on bitcoin itself is higher than the trust of a government delivering on their promises of paying futures which are cash settled and nobody holds the assets. If CME or CBOE end up shorting bitcoin and they end up on the wrong side of the stick, they will face massive loses, who knows if they end up not being able to pay market participants to avoid systemic risk (they would end up needing to prints lots of money to cover losses, and they may end up screwing participants to avoid that). We've seen deposits over $100,000 not being covered in banks before, I wouldn't be surprised if they end up defaulting if they need to..

As I said.. just hold the bitcoin, trust code, not promises.

You have a legal contract that is telling you that you are just acquiring a bitcoin or whatever your are buying only that *indirectly*

You can not be scammed by the CME or by the CBOE...


Everybody who is investing in futures are the lazy ones who are not even capable of creating a wallet or just an account on any exchange who has short/long positions.. Or just any broker that is safe enough, they all have short and long positions.

Futures will certainly be used in this way, basically they act as a form of insurance. Mining is one use, miners can sell futures to ensure that their costs will be covered as mentioned. It's a smart strategy and eliminates risk for them of course it will likely reduce profits but that's a decision to make.

I'm still getting my head around it to. Its basically a bet on how something will perform price wise.

What I'm confused about is some people are saying the futures involve no bitcoin, but they do my the standard 'old school' definition of a future, which is a transaction agreed upon to take place at some predetermined time in the future. So If I have bitcoin to sell, i'm shorting and if you want to buy bitcoin you are holding the long. If we decide on a price of $18,500 with a date of February 14th, 2018 then on that date I would, by assurance of our contract, sell you bitcoin at $18500. I think the gamble here is you are hoping the price will be higher than 18.5k and you would therefore being buying at a discount. I'm hoping btc is worth less than that, so I can basically sell it to you at a profit then buy another one at a lower price to replace my holdings, so net profit.

https://www.investopedia.com/university/futures/futures2.asp

says "
So, a futures contract is an agreement between two parties: a short position - the party who agrees to deliver a commodity - and a long position - the party who agrees to receive a commodity. In the above scenario, the farmer would be the holder of the short position (agreeing to sell) while the bread maker would be the holder of the long (agreeing to buy). We will talk more about the outlooks of the long and short positions in the section on strategies, but for now it's important to know that every contract involves both positions.

Read more: Futures Fundamentals: How The Market Works https://www.investopedia.com/university/futures/futures2.asp#ixzz5151u6qUr
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 "

Did you happen to watch the video I referenced and understand the tactic that is being used? Basically, you'd crunch the numbers and lets say you'd short 10% of your expected mining rake at a lower price than you could make a profit after rent/electrical cost (if applicable).

I"m just curious if anyone is employing that strategy. In theory, it does check out.

I don't get very well how a future is different than selling some of your stash for a retail client, I suppose the big advantages are for institutional investors....

I won't because like you said it is short term. In the short term a whole wide array of things can happen and I am not concerned with them at all. What I am concerned with is the long term outlook of bitcoin and for me right now that remains unchanged and I am as bullish as can be. Until the long term view changes I won't do anything to compromise my strategy in the short term.

I only feel safe if im holding the private keys of my bitcoins. The futures are nothing but some contracts in some computer, it is a distraction to me, the people involved don't even hold the underlying asset. If there are fluctuations in the price if I hold through it. Also you need a special verification to be able to operate with futures if im not mistaken, which I don't have anyway.

I'm don't operate a big mine, but I'm curious if there's anyone out there who is using the futures to offset your short term losses
(https://www.youtube.com/watch?v=ZUiMJ9iy7to)