Nasdaq Believes Publicly-Traded Long Blockchain Misled Investors
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Now the fight took only a couple of hours and we've already seen prices above 11, on the major exchanges today. There's nothing that can stop Bitcoin, right? Well, let's step back a little. Let's try to understand what causes this steep price increase based on such news after all, these futures are all cash-settled and what might happen once they actually get traded.
To understand this, let's first clarify how cash-settled futures work and why they can influence the Bitcoin market and others, later on. A future is a contract between two parties, Alice and Bob, where they agree on a definite price for an underlying good, typically a stock but could be anything else like oil or potatoesfor delivery in the future. This contract is then binding for both parties, but it also has a price that needs to be paid betwwen Alice and Bob.
He'll buy shares from Alice at and sell them on the market right away at, let's say, This, in essence, is a future. Technically, some people might complain that there's a difference between call and put and between forwards and futures, but let's leave it at that for now.
Why is this important? Cash-settled futures and other derivatives mean that you can bitcoin price nasdaq a lot of future positions without ever touching the underlying. As a result, the amount of traded futures bitcoin price nasdaq be 10x or x bitcoin price nasdaq amount of available underlying.
We'll see where this brings us wrt Bitcoin in minute. This all could be an explanation to why the price is soaring, now more than ever. Bitcoin price nasdaq you want to bet on a price drop rather than an increase. This can be easily done with futures, as well. After all, Alice is doing exactly that. She could have done that with Margin trading bitcoin price nasdaq short selling sell Bitcoins that she borrowed, and buy them back on the market later.
But to short-sell, Alice needs to borrow actual Bitcoin. That way, she cannot short-sell more than, say 16, Bitcoin the current theoratically available amount. However, with out cash-settled futures, she can do this with 1bn Bitcoin or more. After all, the real Bitcoins are bitcoin price nasdaq touched.
It gives me a good perspective of what to expect. I don't understand much about the financial market but I aways like the idea of be an investor and the crypto coins and exchanges makes it easy to jump in. I've had a discussion with some colleagues about the current price increase and though I'd just write it down.
Luckily, I used to work at a major European exchange provider for over 7 years The prices are crazy now IMO. Looks at this screenshot a friend of mine sent me today.
Do you believe is that possible? I'm not sure about that. Bitcoin price nasdaq would that "margin tether bitcoin price nasdaq look like I wonder?
You have completed some achievement on Steemit and bitcoin price nasdaq been rewarded with new badge s:. Click on any badge to view your own Board of Honor on SteemitBoard. For more information about SteemitBoard, click here. If you no longer want to receive notifications, reply to this comment with the word STOP. By upvoting this notification, you can help all Steemit users. What is a bitcoin price nasdaq Cash-settled futures What does it mean if a future is cash-settled?
It basically means that in our example above, Alice will not deliver actual Alphabet shares to Bob, by they agree that they will just settle bitcoin price nasdaq the price difference to the reference price. Why would anyone be interested in trading cash-settled futures? The idea original idea was to hedge yourself against a potentially catastrophic price movement.
A chemical company will need a lot of oil so they want to have certainty about their oil supply price a year from now after all, they may have long-term contracts to sell their products at certain prices. A frozen-fries company may want to lock in the price for potatoes.
A coffee roaster the price for raw coffee. Furthermore, they may not be interested in buying the actual material but a bitcoin price nasdaq one instead. That way, at least a certain price movement will not suddenly be threatening bitcoin price nasdaq business. How that all relates to the Bitcoin price You may already see where this is going, bitcoin price nasdaq I'll explain that theory anyway: Once there are futures on Bitcoin, people who want bitcoin price nasdaq invest in Bitcoin don't need to buy "physical" Bitcoin anymore, they can just buy a future.
This opens up Bitcoin as an investment class to many more investor groups bitcoin price nasdaq before. This should be great for the Bitcoin price nasdaq price, no? Nah, not really This all could be an explanation to why the price is soaring, now more than ever.
What hedge funds could do Now a typical hedge fund is in exactly that kind of business. Furthermore, Bitcoin and crypto currencies in general are a rather unregulated market where market manipulation is not sanctioned. That way, they could be buying as much Bitcoin as they can now which, as a nice side effect, will push the price up and then open up short positions bitcoin price nasdaq on falling price on the futures markets, but at x higher volume than the actual Bitcoin market.
What we can do about it Nothing much, really. However, the more liquid and efficient the markets and the more money is the market, the more difficult and expensive these price manipulations are. Bitcoin price nasdaq market cap of Bitcoin may not be the ideal indicator for that, but an increase in that meaning in the actual Bitcoin price may be bitcoin price nasdaq for that.
Plus, less hodling, more trading. Authors get paid when people like you upvote their post. You have completed some achievement on Steemit and have been rewarded with new badge s: For more information about SteemitBoard, click here If you no longer want to receive notifications, reply to this comment with the word STOP By upvoting this notification, you can help all Steemit users.
