I see many people euphoric about future contracts on Bitcoin and how it would drive Bitcoin to "da moon" and I think that anyone that uses the argument simply doesn't understand what future contracts are.
The most likely outcome of bitcoin hitting the traditional market money is stability. Future contracts are derivatives of the asset they cover, and thus their volatility are exponentially higher than the underlying assent. Now, bitcoin already have an off charts volatility that compete with the highest options on the stock market, so their derivatives would be insane rocket rise and falls. So why do I say that won't be the case? Because big pockets will bet on a future price and it will be in their interest to move the market to meet their target. From now on, US money will be able to short Bitcoin with traditional instruments, and at the same time, they will try to move the market. So resistances and supports are going to be stronger, channels are going to be tighter and 20% moves in a day trade days will be gone. Bitcoin will most likely behave like any other stock. Will that happen next week? Probably not. Right now we are seeing huge buys coming from US, and I believe that's due to big players buying Bitcoin so they can offer options on it. Everyone knows that if you sell options on an asset you don't hold, you are insane. So we are we are likely seeing an increase on buy volume for a while yet, but 2018 will most likely be the end of the party, lights will turn on and people will be left with reality.
The most likely outcome of bitcoin hitting the traditional market money is stability. Future contracts are derivatives of the asset they cover, and thus their volatility are exponentially higher than the underlying assent. Now, bitcoin already have an off charts volatility that compete with the highest options on the stock market, so their derivatives would be insane rocket rise and falls. So why do I say that won't be the case? Because big pockets will bet on a future price and it will be in their interest to move the market to meet their target. From now on, US money will be able to short Bitcoin with traditional instruments, and at the same time, they will try to move the market. So resistances and supports are going to be stronger, channels are going to be tighter and 20% moves in a day trade days will be gone. Bitcoin will most likely behave like any other stock. Will that happen next week? Probably not. Right now we are seeing huge buys coming from US, and I believe that's due to big players buying Bitcoin so they can offer options on it. Everyone knows that if you sell options on an asset you don't hold, you are insane. So we are we are likely seeing an increase on buy volume for a while yet, but 2018 will most likely be the end of the party, lights will turn on and people will be left with reality.