
Ask HN: BTC futures are announced by CBOE and CME. What can go wrong? Discuss - TooSmugToFail
What&#x27;s your view on BTC futures? Big players betting big money on crash, and manipulating the (still illiquid) crypto market to realize gains? Miners&#x2F;Whales playing both sides (fiat futures and crypto exchanges) to their gain?<p>Or you have a more bullish view? I&#x27;d love to hear some fresh thoughts...
======
Order
I'm of two minds on this.

With the futures market being a place that individuals can trade non-public
information for a profit, and the history of Bitcoin being tied to criminal
activity (drugs, ransom ware, etc.), I see a potential for market
manipulation. The value of Bitcoin is still extremely volatile; due to the
inherent anonymity and media presence surrounding the asset, the ability to
trigger a price swing and make a killing in options is a reality.

On the other hand, estimated illicit transactions have decreased substantially
due to the evolving ability for law enforcement to track down individuals from
Bitcoin transactions (worth noting that I couldn't find solid numbers on
this). If this realized reduction of anonymity thwarts most attempts at market
manipulation, I'm thinking that these futures can help Bitcoin more quickly
find stability in the world market.

~~~
TooSmugToFail
I'm not decided either.

One of the scenarios certainly is an implicit regulation of BTC (and with time
Ethereum) trading. Currently, I'm not sure the authorities can call market
manipulation happening on the crypto exchanges. But with futures being out
there, traded on a regulated market, then manipulating the underlying would
surely qualify as market manipulation (not an expert on US securities
regulation).

But this is just one aspect. I'm wondering how soon it will take for us to see
various trading strategies playing both sides of the market (crypto/fiat), and
what effect will that have on the price in the short term, and the future of
BTC going forward.

------
rajacombinator
My 2c: concern is that btc futures becomes like gold futures which are totally
fraudulent and used to manipulate the market. But gold is a bizarro land
that’s cash settled vs paper or something super absurd. There’s not really a
functional way to short “physical bitcoin” right now that I’m aware of other
than participating in the tether scheme. So even if the NY Fed, for instance,
came in and blasted the bid on cme btc it’s not clear it would affect the
physical market. Overall I think it’s bullish just for increasing exposure of
investors to btc.

~~~
TooSmugToFail
I was also decidedly bullish initially (on the exact same grounds that you're
describing), but I'm increasingly aware that this can be flipped the other way
too.

For example: let's say the BTC futures price is lower than the exchange price,
and let's say you hold BTC; pursuing an arbitrage, you buy cheaper futures,
sell BTC to make arbitrage profit; multiply this across many self-serving
market agents, and you have market forces working to eliminate the arb
opportunity: there's our transmission mechanism, regardless of how the futures
are settled.

------
Top19
There was a full-page ad placed in the Wall Street Journal (those run
something like 150k) by a hedge fund manager begging the CBOE to not let
Bitcoin on. This was within the last 4 weeks.

I wish I could share a picture of the article but the gist of it was “could
cause a sell-off that would spread to the entire CBOE and cause a total
collapse”.

