Report. Bitcoin Futures: Market Evolution

Report. Bitcoin Futures: Market Evolution

The first Bitcoin futures was launched almost a year ago on 10 December. Since then it is commonly thought that Bitcoin price drops just before futures contracts expire. Since futures expiry dates are one of the few scheduled events in the ever-changing crypto world, Cindicator’s researchers examined this phenomenon in depth.

For this analysis, Cindicator researchers first looked at volumes on futures and volumes on crypto exchanges in Bitcoin terms to understand the level of liquidity and the development of the market. Researchers then explored the connection between BTC price and volatility movements around futures expiry dates in order to find evidence of recurrent market behaviour during these periods.

Key findings include:

  • Bearish trends during price actions can influence BTC prices in a much stronger way with respect to positioning around futures expiries;
  • The common idea that Bitcoin’s price is always dumped before expiries and pumped right after them has no solid basis (although there are cases when expiration dates should be considered);
  • This analysis should be reconsidered when futures and OTC volumes start to converge, something not so unlikely given the possible entry of institutional investors into the crypto market influenced by, in part, lower Bitcoin volatility and the bearish market trend.