I am not new to trading but I learned a lot of trading skills pretty late. Like I was sticking up with the trading intraday for the local stocks. I never got into the gold and other assets or forex to be honest. I found them very volatile on some days and slow on others which kind of made my investment speculative than technical.
I recently learned about how the stock market companies are adding the crypto component into their funds, and the variety of the asset contracts. So there was this addiction of the future contract with bitcoin too.
So let's talk about the bitcoin futures and how it is going to shake the market for consumers like us.
What is futures contract? how bitcoin makes it different?
This is something I had to learn because I don't have any form background from the options trading and the stocks. So what is this futures contract and how I am supposed to trade and how that would help me make more money. So basically you are a buyer and you buy some asset for the future date and then when you wish to sell it then you would sell at a future date.
Now the way futures contract works is that future option seller make money some of the time and then buyers also make the money some times. Now if we add the bitcoin in this futures contract, you are not going to buy the bitcoin in real time but trade the asset in future time and date and make money off such buyer and seller position.
Yes there will be management fees and there will be variety of exit loads and other govt taxes associated with the same.
Spot ETF? Future ETF? What to Choose?
SPOT ETF are totally different thing where the bitcoin is used as a component in one of the ETF fund. So basically they are going to make use of the bitcoin through their own ownership for the funds and there would be traditional exit load and the management fees too. And you can think of this like traditional funds. In near future even the IRA and other retirement funds would use the bitcoin in their ETF.
And as for the future, here the assumed value is being traded and there seems to be ownership of the bitcoin in any form of the assets. So here however the larger value at the market is going to be causing the future ETF as a good choice of the funds there. And it would be bringing a lot better value for the traders.
Which one to choose? That purely depends on what you want out of the trade and what are your goals. I am not a financial planner so I can't what is the right for you.
Is there any risk? should I take that risk?
There are lot of risks once the crypto gets centralized. First being the centralized players will be manipulating the price. And they would be kicking out the decentralized market movements with their own fund pricing and the stock marnipulation. Which means the future market too would be getting that treatment in the funds. And this means bitcoin's future funds are not safe and are risky.
Does that mean we should go for bitcoin direct on our own? yes that is the point. If you choose to go on your own and that would be safer. You may also find that the regulation that is about to start would be making the price manipulation a bit more stronger too. So in near future the risk for the bitcoin would be larger in the centralized world. So go with direct bitcoin investments.
Bitcoin Futures contracts are here and market is going to welcome the bitcoin in future market and options. So basically things are getting centralized. For me? I prefer the direct purchase of bitcoin from the market.