Ask HN: How Would a Bitcoin Futures Contract Expiration Affect Current Price?

6 points

8 years ago

When the 1st Bitcoin Futures contract expired on 17th Jan, the blogs and media called it a "Win for the Bears" and there was a widespread sell off. https://cointelegraph.com/news/first-bitcoin-futures-contract-expires-at-10900-win-for-bears

The next one, the CME Bitcoin Futures, expires tomorrow.

I'm seeing a lot of trading charts, and all kinds of analysis on tradingview.com, reddit and other places, but am having a hard time understanding anything.

My question is, how does a futures contract expiration affect the current price of the security (bitcoin in this case) on the day of expiration.

When the 1st contract expired, bitcoin was at $10,900 whereas the contract was sold initially in Dec for almost $17,000.

Right now, bitcoin (BTC) has been mostly stagnant for the last 2 days, trading between $10,000 and $11,500. Given that this price range is well below the $17,000 Dec price, what would it mean for Bitcoin / BTC tomorrow? Will it go down, or up, and if so, why? Why would it (once again) be a "win for the bears"? [I do know what a Bear and Bull is].

From what I understand, a Futures contract is bought or sold to hedge against risks for the underlying asset. Ex: Buying corn futures to hedge against corn price fluctuations. In case of bitcoin though, there is no underlying asset, right?

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