Know The Impact Of Investing In Bitcoin Futures & Getting Good Returns

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It is widely acknowledged that the launch of Bitcoin futures on authorized trading venues marked an important achievement in the process of bringing digital currency investing into closer alignment with that of traditional financial markets. Cryptocurrency aficionados have high hopes that the introduction of futures trading will attract institutional investors to the industry, despite the fact that some critics continue to hold the view that cryptocurrency assets are too speculative and dangerous for long-term investment reasons. Here’s everything you must know about BTC futures trading.

What exactly are Bitcoin Futures, and how do they work?

Bitcoin futures are a type of derivative trading contract in which several parties agree to buy or sell BTC at a predetermined price at a future date, typically on a cryptocurrency market. This agreement is made within the context of a futures contract for bitcoin. Now let’s talk about the Bitcoin futures ETF, which stands for an exchange-traded fund. This type of fund gives an investor access to the value of Bitcoin (BTC) without requiring them to actually purchase the cryptocurrency. 

The price of an exchange-traded fund (ETF) will continue to have a strong correlation only with the movement of the value of the underlying security even if investors examine the situation hypothetically as well as try to arbitrage away the spread that exists here between ETF and the underlying asset within the event that the price is too high. 

What kind of an effect does the introduction of a Bitcoin ETF have on the price of bitcoins?

Following the release of the news, the price of Bitcoin skyrocketed to a new all-time high of much more than $60,000, reaching a peak of $66,974 and surpassing the previous all-time high of $64,889, which was reached in April. As of the 25th of October, the price of Bitcoin was also still floating at more than $61,000. Just because this ETF is a future-based ETF that records futures contracts rather than the existing value of the asset, the valuation of the ProShares ETF will not be comparable to that of the Bitcoin price. This difference in price is due to the fact that this ETF tracks futures contracts rather than the current asset’s price. The future price that ProShares offered needed to be pegged to a price that was already quoted on an exchange, and the Chicago Mercantile Exchange (CME) was chosen to serve as the benchmark. Because of this, there is a possibility that the ProShares fund will trade at a high price in a bull market and at a discount in a bear market. As a result, the ETF may be a better option for an investor looking to make short-term investments than it is for an investor who is interested in making long-term investments. 

Conduct a thorough investigation into the project’s underlying components.

Before making any investments in cryptocurrencies, it is important to do a comprehensive analysis of the project’s underlying components. The advantages that will be gained as a result of a project will serve as an important determinant of the asset’s appreciation. Whenever technology, teams, and use cases are assessed thoroughly, there has traditionally been a positive outcome for trades and investments. 

Remember to take all of these things into consideration. Do not let yourself get led astray by the excitement. If you do not have the necessary knowledge to evaluate technology properly, you might want to think about getting some advice from an experienced professional. Be very cautious because you are dealing with significant quantities of money here, and you should not put your faith in every expert that you come across. 

Conclusion

The launch of a Bitcoin futures exchange-traded fund (ETF) could play a role in accelerating BTC growth all across the cryptocurrency market. This is because the performance of a large number of other digital currencies is connected to Bitcoin’s performance.

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