Bitcoin futures have been an intriguing addition to the cryptocurrency ecosystem. So far, they failed to make much of an impact. Although the overall volume seems to be going up, the Bitcoin price can do fine just without these financial vehicles. This begs the question as to whether or not Bitcoin futures even matter when looking at the bigger picture.
Bitcoin Futures are a Niche Market
When the Bitcoin futures were announced, a lot of Bitcoin users were excited. Exposing institutional investors to Bitcoin’s price swings sounds very powerful. More money flowing into Bitcoin should have a positive price effect in the long run. That is what most people have hoped for, but so far, the impact is very minimal.
One positive aspect is how the Bitcoin futures volume is rising. Both CME and CBOE have seen an influx of interest in these vehicles. More volume results in more liquidity, which shows institutional investors want to be exposed to Bitcoin. Slowly but surely, the volume for both CBOE and CME is rising.
Compared to the regular trading volume, these futures represent a minor blip. Bitcoin has a daily trading volume of around $8bn as of right now. This is excluding the OTC trading market, which has grown spectacularly these past few weeks. Futures, on the other hand, struggle to reach $750m. It isn’t necessarily the impact or change people had hoped it would be.
Bitcoin Doesn’t Need Futures to Succeed
The big question is how these Bitcoin futures will affect the long-term value. As we saw in late 2017, the Bitcoin price does fine on its own without such investment vehicles. Relying on a third party to invest in Bitcoin is always counterproductive. Cryptocurrency is all about being in control of your own money or investment. Futures contracts are the complete opposite in this regard.
Recent positive Bitcoin price momentum has become visible across all exchanges. This has seemingly little to do with the increase in futures trading volume. Cryptocurrency sees a bearish cycle quite regularly before new all-time highs are reached. With the futures launching near the most recent all-time high, it seems they have had an adverse price effect so far. That situation can still change in the coming months and years.
None of this means Bitcoin futures aren’t a positive addition. It is always important to look at the bigger picture. So far, these products have not matched expectations of Bitcoin speculators. At the same time, the products are only available for just under five months. The remainder of this year will be quite telling for both investment vehicles and the Bitcoin price alike. What the final tally will be on December 31st, remains to be determined.