BitMEX XBTZ19 Bitcoin futures contracts will result in high Bitcoin price volatility
In December 2017, Bitcoin futures were first introduced on the CME and CBOE cryptocurrency exchanges. Before that, many expected that asset class to support Bitcoin price hikes. Looking ahead, on December 27, 2019, the Bitcoin futures contract on BitMEX will expire. And many Bitcoin price forecasts from “crazy” to “terrible” continue to appear.
Bitcoin price shows high volatility jumps as BitMEX futures to expire
After CME and CBOE, other trading platforms are also starting to add Bitcoin futures, such as BitMEX. In September 2019, Bitcoin futures were announced by Bakkt and Binance. However, at this point, things are not going very well.
About a week later, things were getting better when the Bitcoin Bakkt futures traded for nearly $50 million.
∙ Today’s volume so far: 6312 BTC ($45.56 million)
∙ Last traded price: $7,218
∙ Trading day progress: 83%
∙ Current daily Bakktarget™: 6994 BTC ($50.48 million)
— Bakkt Volume Bot (@BakktBot) December 19, 2019
On December 27, 2019, BitMEX’s XBTZ19 contract will expire. And according to crypto analyst Jacob Canfield warned, after that day, Bitcoin prices will fluctuate during the liquidation of futures contracts on BitMEX. Bitcoin futures on CME will expire on December 27 this year, too.
December 27th, futures contracts expire on Bitmex on XBTZ19 (December bitcoin futures contract)
There is usually a lot of volatility around these contract expiry events as people close their positions.
Trade safe ?
— Jacob Canfield (@JacobCanfield) December 26, 2019
Futures contracts are not a threat to Bitcoin
Well-known cryptocurrency analyst PlanB said that he did not see any danger from Bitcoin futures to the price of the leading cryptocurrency.
Even if central banks start the future selling large BTC amounts, the future prices will be controlled below the spot level, but the spot market will not go the way. The main factor here is that the supply of Bitcoin is inelastic, unlike gold.
I don’t see futures as a threat to #bitcoin. Central banks can future sell large amounts with unlimited fiat money, pushing future prices below spot (backwardation), but spot markets will not follow all the way, because they run out of sellers (unlike gold, supply is inelastic). pic.twitter.com/boEzjqV6zh
— PlanB [Jan/3➞? ] (@100trillionUSD) December 25, 2019
Bitcoin hashrate has dropped
Bitcoin analyst Jack shared a chart showing Bitcoin hashrate returned to a low level after reaching a high of 111.86 EH/s.
Jack explained Bitcoin hashrate could impact Bitcoin’s price by increasing pressure on miners by reducing the price. Hypothetically, when the price drops, the percentage of them who sell the amount of Bitcoin mined will increase.
Hashrate does not impact price directly but it does have impact on the selling of miners for covering their cost basis
Increased pressure on miners by lower prices hypotethically increases the ratio at which they sell their mined Bitcoins
— //Bitcoin ?ack (@BTC_JackSparrow) December 26, 2019