Possible Impacts of Bitcoin Futures on the World Economy in the Next 10 Years

By Alo Kingsley   Oct 12, 2019 3 Min Read

Although the Bitcoin futures market has been around since 2017, public interest only spiked last month when Intercontinental Exchange's Bakkt was launched. However, there are still some individuals who do not clearly understand what it is. 

 

The definition of "futures," also known as futures contract - is an agreement to sell or buy an asset at a set price, on a set date in the future. It is used to curtail risk involved with volatile assets. 

 

Blockchain futures are contracts (as defined above) that people get into to buy Bitcoin or sell units of Bitcoin at a certain time in the future for an agreed price. 

How has the introduction of Bitcoin futures impacted the market? 

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The Bitcoin futures market opened on the 2nd of December 2017 by the Chicago Mercantile Exchange(CME) and the Chicago Board Options Exchange, which was about the same time Bitcoin rose to its highest ever since its inception, the increase in price didn’t last too long, in just a few months it fell again.  

 

Some Cryptocurrency experts say that the fall of Bitcoin after its boom was due to the opening of the Bitcoin futures market at that same time. This claim is not baseless; it is based on research and data accumulated from different trading days, before bitcoin’s fall in price. Even though there has been much research to prove this, it remains a theory, a probability; Bitcoin futures may have caused the markets to decline. 

 

Another thing peculiar about this claim is, it states that even though Bitcoin may have caused the decline of prices in the market, this is just the short term effect; there is uncertainty about what the long term effect might be. Though most experts speculate that the long term effect of Bitcoin futures on the market, is to tame the market’s volatility, making Bitcoin- and many other cryptocurrencies- another regular investment. 

 

These claims were refuted by the managing director of CME, one of the organizations that brought started Bitcoin futures; he said that Bitcoin futures had no hand in the decline of the market. 

 

There are still some other groups of people who don’t go with or against popular opinion. They have another opinion on the matter; the effect of Bitcoin futures on the market will be to make it more informational efficient which it was still trying to be at the moment.  

 

With all these speculations, claims and theories what should be expected in the next ten years? 

 

There are two general opinions on the short term effect of Bitcoin futures on the state of the market:

  • Bitcoin futures in some way has affected the prices of Bitcoin negatively and
  • Bitcoin futures doesn’t affect the market at all 

They are both based on sound grounds, data, and research. But for its long term effect on the market there has only been one speculation so far, which is; whether Bitcoin futures is good or bad, the presence of Bitcoin futures in the market will definitely consolidate the prices of cryptocurrencies in the market, giving it the ground and foundation to function as a viable asset, by reducing its high volatility. 

 
 

Image via Shutterstock 

 

 


About the author

Alo Kingsley
A blockchain/cryptocurrency enthusiast and writer with immense interest in the decentralized power inherent in cryptocurrencies and the growth of the disruptive innovation of blockchain in, Africa. I also believe that the government needs the power of cryptocurrencies just as cryptocurrencies need the power of the government. When I'm not writing, I'm meeting friends and seeing movies, swimming and playing chess will soon be added to the list.




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