A Bitcoin exchange, whether it is futures or spot, works similar to an online trading firm, will charge its customers a fee to perform trading activities. As exchanges will stumble upon the jeopardy of hacking and burglary, it is shrewd not to trust a Bitcoin exchange with all your Bitcoins. You are supposed to split and keep them separately in other devices or cold storage.
Currently, as BTC futures are being offered by some
of the most famous marketplaces, traders, investors, as well as speculators will
get a bounty of benefits. These are centralized marketplaces, which will make trade
easy based on the outlook of a trader for bitcoin prices, get exposure to
bitcoin prices, or they will hedge the positions of their existing bitcoins.
Overall, the introduction of
bitcoin futures by CME and Cboe will make price discovery as well as price
transparency easy, facilitate risk-management through a controlled bitcoin
product, and provide a further drive to bitcoin as an acknowledged asset class.
BTC Futures Contracts are a practice of hedging positions and reducing
the unknown risk. These contracts are used for sorting out between current spot
and future contracts, as well. Bitcoin futures have been more related to miners
who come across the risk of future prices, which cannot be known.
Every month, millions of futures
contracts have been sold in the market. The size of the standard contract will
usually start at $10. BTC/USD-3.14 is a typical instrument, in which BTC/USD
refers to the swap rate of exchange between Bitcoin and the US currency, which
is the Dollar. The numeral 3 signifies the month of March, and the number 14
denotes the year 2014. BUH4 will be the trading symbol of BTC/USD-3.14. Every
month, the instrument will have a trading symbol, such as H will denote the
March month, B the BTC, the letter U will stand for the US Dollar, and the
number 4 will signify the year.
In a BTC Futures market, an investor has to purchase 50 futures
contracts if the cost is $500/BTC, each will assume the value of $10.If you
would like to open an encouraging position, then you have to go long with buy
contracts. If you decide to open a pessimistic position, you will go short with
sell contracts. Your position can be either optimistic or pessimistic for the
same instrument.
If you are new to the world of
Bitcoin trading, meaning if you are a new bitcoin trader or investor, then you
will be in a great concern due to the increase or decrease in prices of bitcoins.
The major reason for the price fluctuations of this cryptocurrency is chiefly because
of the lack of confidence in the bitcoin structure, its easily broken status, as
well as due to its severe reaction to bad news. This will often show the way to
a sheer price fall, sooner than the increase of its price again. However, in
these days, this wild rice fluctuation of the cryptocurrency has somewhat calmed
down when compared to the volatility of bitcoin at the time of its launch.
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