
Ask HN:How will Bitcoin futures affect the actual price? - tek-cyb-org
I don&#x27;t understand how, since the Futures contracts do not get settled in Bitcoin, the for example, shorting of Bitcoin Futures, will affect the actual price. Can someone explain?
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cwkoss
People who have funds on both the Futures exchange and normal Bitcoin
exchanges can arbitrage for free profit.

This could create some 'tail-wags-dog' behavior, but at this point it is
anyone's guess how this will play out.

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tek-cyb-org
hmm, I still don't quite understand. The bitcoin exchange would have to
believe the futures market prices if I'm not mistaken. There wouldn't be an
actual effect. Am I making sense?

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cwkoss
Say Bitcoin is trading at $15K on the bitcoin exchanges, and $14K on the
futures exchange.

If someone has funds on both, they can sell on the bitcoin exchange and buy on
the futures exchange to make $1K profit without changing their exposure, 'risk
free'.

Unlike other kinds of arbitrage, however, because the futures settle in USD
value, you'd have to move that USD to the exchange and rebuy to get back into
a position to repeat. I _think_ settling in USD will somewhat suppress the
effect of futures market short pressure (have to rebuy to sell again, unless
on exchange with naked shorts available to users with only USD balances), but
only time will tell.

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tek-cyb-org
Ok so this is the first time I'm hearing about arbitrage, so I did some
googling to find out what it is. Here is what I am unsure of, Bitcoin is
Bitcoin, it's an asset that you buy from an exchange (or mine) where as
futures contracts are just contracts that don't equate to bitcoin and are not
redeemable in bitcoin. This makes arbitrage not possible. That is my
understanding.

