Throughout the years, different presentations of cryptocurrencies and payment methods have surged. There are many new developments in the technology space. This is why we are going to start by explaining what Bitcoin Futures are.
The Bitcoin Futures are a group of cash-settled contracts that are based on the Gemini´s public sale price for Bitcoin that is denominated in US dollars. The Bitcoin Futures were opened for trading on the CBOE futures exchanges, in 2017.
On the other hand, the exchange-traded fund also called ETFs—are a marketable security that tracks an index or a commodity and a basket of assets like an index fund. They trade like a usual stock on a stock exchange.
Now, it is fundamental to know how they affect the price of the commodity they are based on and if the investments in the commodity increase. In both cases, the price of the commodities is not set by a single person or entity and it is exclusively in the case of the exchanges. In exchanges, the commodities are traded through future contracts. This kind of contract tries to obligate the holder to buy or sell a commodity at a single price in the future.In Bitcoin Futures, it can depend on the speculators of the market, but commodity prices are all mostly established by supply and demand.
In the case of the ETFs, you will find diversification; this means that one ETF can give introduction to a group of equity or styles. Also, with the ETFs you are able to trade lower fees, and this way you can trade more like an equity investment. The ETFs can be bought on margin and sold short. And, one of the most important things is that they allow you to manage risk by trading Bitcoin Futures and plenty options just like a stock. You can find portfolio diversification. In the case of the Bitcoin Futures, the most important advantage is that the clients have access to different markets with the opportunity to trade all the way. They try to reduce volatility and allow to the traders to utilize a truly high liquid investment vehicle.
The Chicago board options exchange (CBOE)was the first platform to launch Bitcoin future, and their future contracts are now under the symbol XBT. Meanwhile Nordic Nasdaq have offered derivatives based on cryptocurrencies for some time and the investments in these derivatives have grown beyond expectations with over 1 billion SEK ($112 million USD) invested in Bitcoin.
In the case of the Gemini twins (Cameron and Tyler Winklevoss), they created and proposed an application that was blocked by the US SECurity and exchange commission (SEC). The SECurity regulator found their reasons and arguments truly persuasive. The SEC said to the Winklevoss brothers that they can keep offering products once the Bitcoin market has grown enough. The first-ever Bitcoin ETF is still not approved but with increasing number of applications by the likes of CBOE, Bitwise and Van Eck / SolidX chances are that we will have that by this years end.