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Here’s how you can trade Bitcoin Futures

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The Chicago Board Options Exchange, CBOE will launch Bitcoin futures on December 10, 2017 at 6pm E.T , it will be a landmark in bitcoin history and first opportunity for institutional investors to jump into the Bitcoin market.

Interest level of investors in bitcoin is really high, every one wants to know how they can trade bitcoin futures at CBOE, here’s how you can trade bitcoin futures

The Cboe will start by listing three near-term serial months. They will likely be January, February and March. They will expire on two business days prior to the third Friday of the month.

What will the initial prices be and what is the size of a contract? Each contract is one bitcoin. Market makers will set an initial price for each month and trading will begin. The front-month (January) price will likely be close to the underlying cash price. The minimum price interval is $10.00 per contract. The contracts are traded and settled in cash (you get dollars, not bitcoin, at the settlement).

How is the price determined? There are many different bitcoin exchanges, but Cboe uses Gemini Trust Co., an exchange and custodian founded in 2014 that allows customers to buy, sell and store digital assets such as bitcoin. There is a lively debate about how to “accurately” reflect the bitcoin price. CME, for example, is using the Bitcoin Reference Rate which is an aggregate of prices on four different exchanges. Bitcoin futures at CME are set to begin trading Dec. 18.

What are the fees for trading? Cboe will be waiving all of its transaction fees for the month of December. After that, the basic retail rate is $1.00 per contract.

What is the margin rate? Right now, the Cboe and CME will have margin rates of 40 and 35 percent respectively. (Note: Cboe has recently raised the rate from 30 to 40 percent) For example, if bitcoin is trading at $15,000, you can purchase a contract on margin for $4,500 (30 percent of $15,000).

When can I trade? Almost 24 hours a day during the week. Regular hours are 9:30 a.m. to 4:15 p.m. ET Monday through Friday, but extended trading hours go from 6 p.m. ET Sunday to 9:30 a.m. ET Monday, then 4:30 p.m. to 9:30 a.m. ET Tuesday through Friday.

How can I trade bitcoin futures on Cboe? You should contact your brokerage firm. Not surprisingly, retail brokers do not have a uniform stance on whether they will allow their clients to trade bitcoin futures. Fidelity is not currently planning to allow its members to trade futures contracts. Interactive Brokers will allow trading, but with a much-higher 50 percent margin requirement. Charles Schwab says it is evaluating its client interest in bitcoin, including their familiarity with the risk. And a TD Ameritrade spokesperson told CNBC they will only allow trading once volumes, open interest, and the market place meet their threshold

A number of large firms that typically cater to institutional brokers have already said they will not initially offer their clients access to the bitcoin futures market, including JPMorgan, Bank of America Merrill Lynch and Citigroup. Goldman Sachs, the largest U.S. futures broker, will offer access but only for certain customers.

If my broker doesn’t allow me to trade bitcoin futures, are there any other options? You could open a separate futures account with a futures broker, such as R.J. O’Brien.

Are there any price limits or trading halts? There are no price limits, but trading can be halted for two minutes under certain circumstances, for example when prices rise or fall 10 percent from the previous day’s price, and five minutes if it rises or falls 20 percent. The cash market for bitcoin would not be halted.

Will futures reduce or increase the volatility of bitcoin? No one knows. A lot will depend on how liquid the contracts themselves are, which depends on the number of participants and how many firms allow access to trading.

Can you short the futures contract? Yes. For example, suppose the bid is $15,000, you can go in and sell it immediately (you will have to post the margin requirement of 30 percent). You are now short one bitcoin contract at $15,000. If that goes to $16,000, you will have a potential loss of $1,000, and you may be forced to put up more margin. If it goes to $14,000, you have a potential profit of $1,000. You can close out the position at any time, or if you wait until the expiration it will settle automatically to cash.

Who are the market makers? There has not been a formal announcement of who the market makers will be, but some of the known large players — such as DRW and Virtu Financial — will be participating.

Who are the sellers? This is one of the big questions. You will likely see bitcoin miners as well as hedgers, or people who own bitcoin but sell futures against that to capture the spread. You may also see institutional traders come in because it’s a cash traded and settled account, you don’t need bitcoin.

This is a great step towards adoption of bitcoin United states and institutional investors would be able to participate in the market.

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6K support loosing strength

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$6000 support level for Bitcoin is holding pretty well since Feb 2018, but every time price bounces off from 6K level it marks a lower top

Bitcoin support level is losing its strength day by day, traders expect a nice bounce from this level and strength in the rally to breach the $10000 mark but its not happening and now price is making lower tops every time there is a small rally.

Take a Look at the one week chart of Bitcoin at Bitfinex

According to many Technical analysts, weekly chart is looking scary and they are expecting as massive crash in prices if price breaks below the $6000 level and stays there.

Low volumes 

Another alarming situation for Bitcoin is low volumes, Bitcoin ‘s trading volume has dropped significantly in the last few months , in fact this month has been the lowest in more than 1 year and that shows investors are taking a back seat in this market, institutions are not yet ready to jump into the market and without money from big investors, it is not possible for Bitcoin  to rebound or reach All-Time-High levels in near future.

$6000 support history 

$6K support for Bitcoin started in Feb 2018, when Bitcoin crashed from $12000 to $6000 within few days after a wild crash. But price rebounded once it touched the $6K level and then after that it started making lowers highs (lower tops) and price rejected from $10K level then $9K and then $8K , made it ever so difficult for Bitcoin to rebound, but one thing was there all the way through, $6000 support level, although price broke below this level 1 or 2 times but not for long, price stayed above $6000, but now as the time is passing by it is getting more and more difficult for Bitcoin to keep this level of support as there is massive pressure from the bears and they can take the price down anytime in near future and if that happens, there will be panic in the market and selling pressure can take price down to  $5000 or even $4000 as well, on the other side Bulls must be hoping that $6000 support is protected once again.

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Crypto Market cap reached $275 billion

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Market cap of crypto currencies reached the level of $275 Billion after a spike on 4rth July 2018, Bitcoin maintaining its dominance at 42% , making it the biggest crypto currency in the world.

Bitcoin price currently trading at around $6700 after a 3% spike in the price , making it jump from $6500 to $6700 within minutes, analysts are predicting that this recent upside movement in crypto market in weak and need to sustain these levels in order to attract more buyers, otherwise overall bearish market is still in control.

$7000 is a key level for Bitcoin 

$7000 is very important level for bitcoin according to many technical analysts, If it breaks above $7000 and stays there then chances are that upside move will be healthy, otherwise bear will look forward to take control of the situation again.

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Switzerland merging Cryptocurrencies with conventional banking

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Switzerland is on the right track to become a Crypto nation and country is making efforts to allow cryptcocurrencies to fully access conventional banking .

Bitcoin and other crypto currencies has taken a big hit in brutal bear market of 2018 but that’s not stopping Switzerland to allow cryptocurrencies to fully access conventional banking system within the country. Switzerland is currently in progress and drafting rules and regulations for such collaborations.

Heinz Tännler, Swiss expert & finance director of Zug canton, told media earlier that politicians were moving to allow crypto companies to work with banks, adding that Switzerland’s central bank, financial supervisor and federal government “are willing to help”.

He said: “We hope to clarify relationships by the end of the year at the latest.

“Time is pressing, other jurisdictions such as Malta and Singapore are very active and making a lot of effort to attract these companies. The lack of access to bank services is a significant competitive disadvantage.”

“We have to push certain national institutions to resolve this problem quickly and effectively, but that now seems to be going well.”

Blockchain becoming the global phenomenon 

The concept of Blockchain is interesting and attractive for all the countries, many countries may disagree on the existence and usage of cryptocurrencies, but all of them agree with the fact concept of blockchain is not going anywhere and governments can benefit from this technology in various fields, but if you ask any expert of blockchain, he would tell you that success of Blockchain technology has to be linked with existence of crypto currencies, without crypto currencies, and ecosystem can’t exist, many governments around the world are slowly recognizing the fact and Switzerland is definitely on the right track if they allow crypto currencies to work in collaboration with the Banks, because many banks around the world are not allowing crypto currencies to offer services through them, but this initiative will open many doors in that regards.

 

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