Bitcoin and the Future of Futures
December 11 may be the day Bitcoin, as we know it, changes forever. It’s the day CME Group, the world’s largest futures exchange, plans to start Bitcoin futures trading.
CME Group’s cash-settled futures market for Bitcoin may prove to be both good and bad for the number one cryptocurrency, depending on your current position. Since CME will not own any Bitcoin, they will not be in the same class of investor as long-term hodlers and newbies just jumping on the crypto bandwagon. Their objectives will be different, and they may lead to a financial fork.
Predictions about the full impact of the futures market on Bitcoin’s epic rise range from modest increases to the end of the crypto gold rush. A true financial fork would mean that CME’s futures will create an entirely independent market from the current market where traders hold and sell actual Bitcoin. If institutional money flowing into Bitcoin futures remains separate, it would not trigger the next wave of price gains that would push the coin to $20,000.
The Wolves of Wall Street will, however, give Bitcoin institutional exposure, which is precisely what it has lacked. With big banking and hedge fund money on the table, Bitcoin can gain the market stability and regulation it needs for broader acceptance. Big money will also curtail trash talk and its spooky connections to crime, hacking, drug lords, and fraud. It will also impact daily trading strategies, as large capital flows will mean less volatility and a decreased ability to cash in on wild price swings. CME futures may prove that the Bitcoin beast can be tamed.
But not for long. If the underlying blockchain technology of Bitcoin proves to be as robust as technologists believe it is, it will continue to displace middle men while it rapidly erodes the complexities of the banking industry. And if Bitcoin is the face of a real financial revolution, does it need the engagement, on any level, of its financial opponents and oppressors? Does it need adoption by CME or other Wall Street interests to claim victory or to reach a critical mass or to show signs of strength and success?
As with any new technology there are several tiers to mass adoption. The entrance of CME and hedge fund money is moving Bitcoin and all cryptocurrencies to the next level, with its own cyclical dips and surges. Historically, early adopters are followed by big or smart money (CME and hedge funds), before the disrupting invention reaches the general public. Despite any retraction or negative spin from CME futures, Bitcoin and blockchain technologies are still on a long albeit unsteady trajectory toward mass adoption.