Bitcoin Futures Trade At Discount

| Publish date: 01/16/2019
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Contrary to popular belief, it seems futures market may not necessarily be in awe of Bitcoin’s recovery from 15-months lows in December. This is, in fact, evident by the signs emerging. And, at press time, the spot price of the world’s leading cryptocurrency appears to be higher than the futures price.

Futures Contracts Trading

As of writing, the spot price – also known as global average – is around $3,650. It is basically up by 16.9 percent from the low of about $3,122. The latter is the figure reached by the digital currency last December. But as far as futures contract trading is concerned, it is reportedly trading below the said spot price.

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January futures, in particular, are showing a discount worth of $20 (i.e. futures price-spot price). Plus, contracts that are expected to expire in months of February, March, and June appear to be trading at a discount worth of $30, $40, and $80, respectively.

BTC’s Futures Trading

For the sake of explanation, futures trading refers to the agreement involving two parties to either buy or sell something at a certain future date or price. Due to this, investors are able to hedge or even speculate on the specific performance of the underlying asset.

It is safe to say that Bitcoin futures trading, specifically at a discount to spot price – or known as market inversion – is at a clear indication suggesting participants be still bearish.

In other words, the digital currency’s price in one, two, or six months from this time of writing is likely to lower than its supposed current price. As such, it could be expected that the bear market is very well alive and kicking.

It even holds true that the outlook may look bullish, especially if futures start to trade at a premium. In addition, this is always believed to be a classic trait of what is now known as the bull market.

Still Bearish

Based on the aforementioned, there should be an unprecedented rise in terms of premium, which would ultimately serve as a tell-tale sign of the market that is nearing a long-term top. For instance, BTC futures are going to carry a huge premium of $2,000 over the spot price seen in December from 2017.

Investors and users are expecting the digital currency’s price to be lower in the future. This, in particular, suggests bearish. This is quite true, especially considering the fact that some essential announcements are going to be revealed this first quarter.

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