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Time To Short Bitcoin When CME Launch Futures?

The price of 1 bitcoin overtook that of 1 oz of gold in early 2017 and has grown 10 fold since then. With the upcoming futures launched by CME, is it a good time to start shoring Bitcoin? Some Chinese analysts believe so.

Despite the ICO Ban in September, CCTV cannot ignore the ATH of Bitcoin when it broke the 9k milestone. The CCTV report contributes the rise of bitcoin to three reasons:

1. Increasing buyers
2. Acceptance by traditional institutional investors
3. More business acceptance scenarios

Mass adoption has been proved by the network congestion, rising transaction fees and mainstream media headlines.

The CME futures may come at the right time to burst the bubble, as pointed out by some Chinese financial analyst. On a recent blog by Xiaolei, he elaborates the logic and claim that it’s time to short bitcoin.

The rise of bitcoin signals the happening of a major social transition and the United States wants to seize the control of bitcoin by launching futures on CME.

“But I found that the United States is really amazing. If the bitcoin traders in Europe and the United States are drawn to Bitcoin futures and the Asian traders drawn to NASDAQ, then the United States is in full control of the user databases and cash flow monitoring platforms in the Bitcoin market. More importantly, thousands of Bitcoin exchanges across the world will rely heavily on the price indices released by these two platforms(CME and Nasdaq), thus losing their influence over Bitcoin prices.”

He also mentioned that the next step would be charging tax on Bitcoin traders. It’s a strategic move with historical significance and the impact is just emerging.

Albert, a veteran Bitcoin trader, also regards the launch of CME Bitcoin futures an opportunity to short bitcoin. His blog quote from Bloomberg’s report:

“A bitcoin big short is building.”

“The futures reduce the frictions of going short more than they do of going long, so it’s probably net bearish,” said Craig Pirrong, a business professor at the University of Houston. “Having this instrument that makes it easier to short might keep the bitcoin price a little closer to reality.”

He predicts that the contango of bitcoin futures should be 2.4% at annualized rate.  CME trading can transmit price fluctuations to spot market rate much quicker as there is no counterparty risk and sharing of forced liquidation.

“The hedging between CME futures and grass root spot rate is basically risk-free.”

The decisive factor on the contango and backwardation of Bitcoin futures actually depends on the institutional player’s viewpoint.
Whoever the richest will have the final say.

Will you short on CME bitcoin futures?


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