A futures contract isn’t a new concept in crypto trading. However, new investors that are not experienced may be swayed by the misconceptions and myths about BTC futures. Bitcoin futures give you exposure to Bitcoin and allow you to track the price movement of Bitcoin without holding the cryptocurrency.
While the Bitcoin futures contract has a lot of benefits, there are several fallacies which this article aims to address myths and misconceptions about BTC futures.
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Myths About Bitcoin Futures
Here are several myths about Bitcoin futures, we aim to debunk in this article. They include;
BTC Futures will Pull the Bitcoin Market Apart
One of the major myths in the crypto market is that BTC futures are going to ruin the market. The argument is that futures will be bad for Bitcoin and will limit the demand for Bitcoin. BTC futures will not reduce the demand for Bitcoin. Even if the demand for futures increases, it won’t only be driving the prices of futures up. The price of BTC will also increase.
The argument that Bitcoin futures will ruin the market is only a misconception. If the demand for Bitcoin futures is higher than the price of Bitcoin, Bitcoin will gain at price.
Another misconception of BTC futures is that prices will easily be manipulated by large banks. Judging by how the futures contract works, the argument is that large banks can end these contracts before the expiration.
The truth remains that providers can create instruments and can manipulate prices, but they can’t short Bitcoin futures contracts because it is not free for large banks to open short positions.
Exit Bitcoin for BTC Futures
Another misconception is that many bitcoin holders will change to ETF since it is more secure and regulated. This will never be true! Bitcoin remains the largest cryptocurrency with a continuous increase in the number of buyers and holders even though it’s unregulated.
A conversion of bitcoin to the new ETF will result in people selling their holdings which will cause a price decline for Bitcoin when the ETF is purchased. The truth remains that no rational investor will be interested in paying thousands of dollars for taxes and transaction fees in an ETF. ETF has high management fees and the track record is not fully proven yet.
New investors may choose to go for an ETF instead of bitcoin. However, the myths of investors selling off their holdings to an ETF are a myth.
BTC Futures Similarities With Other Futures
Another myth is that Bitcoin futures aren’t like other futures, which is not true. BTC futures offer the same features as other futures. Such as;
Just like other commodity futures, BTC futures secure the market against price manipulation or other market insecurities. The BTC futures also offer price stabilization rules to protect the market against any crash.
Reflection of value
BTC futures reflect the value of the underlying asset when dealing with several exchanges. They reflect market sentiments and provide solutions to price challenges.
Stability remains a huge task in the crypto market. However, BTC futures offer stability during price fluctuations. Bitcoin futures provide exposure to investors, bitcoin miners, or other crypto merchants and also help them focus on their business — make a profit.
BTC futures and the entire crypto market relies on market liquidity and this has continued to increase with the large numbers of investors entering the bitcoin market. Apart from providing more liquidity, BTC futures provide exposure to bitcoin.
Hedge Price Risk
Investors and bitcoin holders can hedge proven risk by reducing the risk of negative price movement by entering a short future position. This will help prevent losses and create additional revenue.
Speculate on Market Direction
BTC futures like other futures allow you to speculate market direction and price movement. You can always make speculation and earn a profit if the market goes the way you speculated. Futures allow you to earn gains on price movement, bet on the market, etc.
BTC futures are just like any other futures and they work the same way.
Why Should You Trade Bitcoin Futures?
The good thing about futures contracts is that you can enter and exit any position without having to deal with slippage. They are flexible for non-bitcoin holders to also involve in speculating prices while allowing them to earn profit in USDT.
BTC futures expose you to Bitcoin. With leverage, you can take advantage of price movements to increase your gains over time.
BTC futures have a high liquidity market recording high trading volumes. A liquid market exposes you to less risk. There are always players in the market to ensure that traders don’t experience much slippage.
Trading BTC futures is best if you want to diversify your portfolio. It offers several trading strategies which you can always trade for more exposure and higher profit. They include; arbitrage, pairs trading, short-selling, etc.
BTC futures market offers the best exposure to Bitcoin and it’s a liquid market with a very high daily trading volume. Trading Bitcoin futures just like any other futures contract is highly profitable and less risky. You can choose to enter or exit a position without losing profit.
Myths about how BTC futures will reduce the demand for BTC or the fear that futures will ruin the market cause many investors to sell off their Bitcoin is not true. Trading Bitcoin has only been made easier and more profitable with futures.