Introduction
In the Bitcoin market, long-term investors often succeed partly because there's no efficient way to short large quantities of Bitcoin. However, the recent announcement by CME Group to launch Bitcoin futures in December 2017 could change this dynamic within a month.
Bitcoin Futures Impact
CME's announcement initially boosted Bitcoin prices, as markets anticipated increased legitimacy for the asset class. Institutional investors began entering the Bitcoin market, expecting regulated futures would pave the way for Bitcoin funds. Yet, investors might overlook how futures enable large-scale Bitcoin selling—previously impossible.
As Terry Duffy, CME Group Chairman and CEO, noted:
"You can't currently short Bitcoin, leaving participants with only buy-or-sell options. A two-sided market generally proves more efficient."
Market Dynamics
Margin Trading Challenges
While margin trading technically allows Bitcoin shorting, exchange liquidity often proves insufficient for large investors. Platforms like Bitfinex permit crypto lending for short sales, but such transactions remain rare, especially since many exchanges restrict U.S. users from margin trading.
Regulated futures could revolutionize this space by enabling cash-settled contracts—short sellers wouldn't need physical Bitcoin.
Bear Market Caution
Bitcoin futures may give skeptics shorting avenues, but this doesn't guarantee success. Given Bitcoin's volatility and tendency for sudden surges, futures might trap short sellers rather than signal downturns. Even JPMorgan Chase CEO Jamie Dimon, who called Bitcoin a "fraud," advised against shorting:
"I wouldn't recommend shorting Bitcoin. It could hit $100K before crashing."
Investors must tread carefully—identifying bubbles proves easier than predicting their bursts.
Expert Price Analysis (November 13, 2017)
Data sourced from HitBTC exchange. The anticipated SegWit2x fork's cancellation triggered crypto sell-offs, unexpectedly boosting Bitcoin Cash (BCH) with a vertical rally that briefly overtook Ethereum's market position.
BTC/USD
After climbing from $650 to $2,969.99, Bitcoin found support at the 50% Fibonacci retracement level. The current pullback faces resistance at the trendline and 20-day EMA near $6,500.
Key observations:
- Break above resistance could signal new highs
- Rejection might retest prior lows
- Current risk-reward doesn't favor trades
ETH/USD
Ethereum trades between $280-$315, with bulls failing to sustain breakouts. A third attempt might succeed—consider buying above $315 with a $280 stop-loss.
Targets:
- $353 (partial profit-taking)
- $367 (adjust stops)
BCH/USD
Bitcoin Cash corrected its 833% rally ($300→$2,799 in 21 days). Expected support lies at $972 (August 19 level). No buy signals currently—avoid trading until clearer patterns emerge.
XRP/USD
Ripple lags behind peers, trapped between $0.18-$0.22. Only consider buying if it closes above $0.22, targeting $0.30 with a $0.17 stop-loss.
LTC/USD
Litecoin broke its $44-$57.7 range but faces selling pressure. Buy at $60.40 with a $52 stop-loss, targeting $71 (take 50% profit) and potentially $80.
FAQs
Q: Does Bitcoin futures approval guarantee price drops?
A: No—while enabling short sales, futures also bring institutional liquidity that could stabilize or boost prices long-term.
Q: Why did Bitcoin Cash surge post-fork cancellation?
A: Some investors viewed BCH as a "pure" Bitcoin alternative, shifting funds when SegWit2x failed.
Q: How should beginners approach crypto investments?
A: Start small, diversify across major coins, use stop-losses, and avoid emotional trading during volatility.
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Note: This analysis reflects 2017 market conditions. Always conduct current research before investing.