Bitcoin futures started trading today and the early morning prices looked something like this:
Contracts expiring in January 2018, were trading at $15,226…
How Are Bitcoin Futures Priced? (Bitcoin Futures Price)
Bitcoin futures work like regular futures and other derivatives. In the marketplace, two people will will agree on a certain contract and a certain price.
One person will bet that the price will be over a certain point when the contract ends. Another person will say the contract will be under a certain price.
The person that is correct received the money.
e.g. Take a bitcoin futures contract priced at $15,555 and it ends on 1 January.
There is a short-holder and a long holder. The short holder believes the price will dip below the agreed price before the contract ends. The long-holder agrees the price will go above $15,555.
On the day the change occurs, the owner of the winning wins the money…
Should I Invest In Bitcoin Futures? (2018)
Investing in bitcion futures is not investing, it’s speculation.
Investing is when someone with a large amount of money, researches a financial proposition and invests in an asset with the aim of investing their money slowly.
Speculation is when someone with little money invests in something without conducting sound, financial analysis. Speculators usually want to earn money fast!
Which One Are You? Let’s See…
• Do you have specialised knowledge in bitcoin, blockchain technology (have you written a paper on it, do you have a degree in a relevant field, do you write blockchain related software?)
• Were you interested in bitcoin before 2014?
• Are you happy to invest in Bitcoin and allow your returns to build over a five year period?
• Would you be happy with a return under 25% over the next few months?
If have answered yes to any of these questions, you are an investor. If you answered no, uou are a speculator!
No ones if you will lose making money speculating on bitcoin. But I will say that no one would consider gambling on wise, long-term decision. Why would it be different for speculating!
What Do I Need To Know About Bitcoin Futures?
-everything in the futures market is agreed upon. The price and date…
-you do not actually own a bitcoin when you buy futures. You are not investing in an actual asset, you are investing in the contract of the asset.
-You will be able to buy bitcoin futures in ticks. Each tick will be worth 5$. A contract will be made up of five ticks ($25).
-There will be a price limit of 20% above or below the settlement price…