How Bitcoin Could Have Become Immune to the Effects of Expiring BTC Futures Contracts
Active cryptocurrency traders had assumed that with yesterday’s expiration of Bitcoin Futures Contracts by the CME Group, the price of BTC would experience a spike in value; and in the positive direction. At first, the social media chats on Telegram and Twitter were debating as to the exact timing of the expiration of the futures contracts.
There was one camp that was without a doubt sure that the expiration was at 4pm London Time. There was also the other camp that was certain it was 22:000 UTC: six hours later. The CME Group clearly states that settlement is at 4pm as can be seen in the following excerpt from the firm’s frequently asked questions page.
Termination of trading:
Last Day of Trading is the last Friday of contract month.
Trading in expiring futures terminates at 4:00 p.m. London time on Last Day of Trading.
Perhaps the team at CME Group needs to clarify again on the exact timing given that this faqs page was last updated on the 15th of December 2017.
Bitcoin’s Price No Longer Correlated to Futures Expiration Dates
Keen observers of the price of BTC during the two expected times quoted above noted that there was no movement of Bitcoin in the preferred upward direction. The price of BTC is still at the $4,000 levels witness early last week. Bitcoin’s value has been oscillating between the $3,600 and $4,400 price range since November 25th.
Back in late October, a research report emerged that debunked the theory that the price of Bitcoin was affected by expiring futures contracts by both the CME Group and CBOE.
The report was by the Cindicator fintech company that builds predictive analytics by merging collective intelligence and machine learning models. The said report had been prepared by the firm’s analytical team and quant researchers.
Simon Keusen, Head of Analytics at Cindicator, explained that there was no clear cut golden rule for trading based on the futures expiration dates.
Looking at past movements of Bitcoin’s price, we can see that there is no golden rule for trading based on futures expiration dates. Overall market trends can influence Bitcoin prices in a much stronger way.
Our conclusions from this research are a good representation of the overall value we seek to provide to crypto investors by presenting different reasons for why certain market movements might happen and encouraging research and the use of analytical tools.
The report (available online) went on to conclued that there was no exact correlation between the expiration of BTC futures contracts and the price of the digital asset.
Evidence of this can be seen only hours ago when we failed to see a spike in value at the expected times of 4pm London time and 22:00 UTC.
What are your thoughts on the effect of expiring Bitcoin futures contracts on the price of BTC? Is it a good fact to know as you trade around the time periods they expire or should we ignore them henceforth? Please let us know in the comment section below.
Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of Ethereum World News or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.