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Are Bitcoin Futures predicting the future for Bitcoin’s spot prices?

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Bitcoin spot prices follow the Bitcoin future prices
Source: Unsplash

Bitcoin’s price action is similar to a lot of other bubbles in history. In fact, BTC’s chart and patterns have striking similarities to the DotCom bubble, Qualcomm Charts etc., which could be due to the fractal nature that is witnessed everywhere in nature and in human behavior. However, an interesting correlation between Bitcoin’s spot price and Bitcoin Futures was spotted by the Founder and CEO of NodeSource, Joe McCann.

McCann’s analysis suggested that Bitcoin Futures prices ‘forecasted’ a story for Bitcoin spot prices and later, followed it promptly. McCann tweeted,

According to Joe McCann, there was a contango spike [Contango, sometimes called forwardation, is a situation where the futures price of a commodity is higher than the anticipated spot price at maturity of the futures contract], at 15:11 UTC between Bitcoin Futures [XBTU19] and the spot price of Bitcoin.

Source: Twitter

The price of Bitcoin Futures [green line] in the above image spiked at 15:11 UTC, whereas the spot price of Bitcoin [black line] at the same time was yet to spike.

Source: Twitter

The spot prices for Bitcoin only reached the peak 2 minutes after the futures spiked, the image for which is attached below.

Source: Twitter

Further, the spot price of Bitcoin as seen on GBTC [Grayscale Bitcoin Trust] was lagging in comparison to the XBTU19 Futures. As of 19:13 UTC, the price of Bitcoin Futures had hit a bottom, which was followed by a spike at 19:26. GBTC hit the bottom at 19:15 UTC, suggesting that there was a lag of 2 minutes, whereas the spike was seen at 19:52 i.e., a lag of 26 minutes.

A Twitter user, @crypto_boy1, commented,

“Great data as always Would be interesting to get historical data on this”

Another Twitter user, @TheCryptoDog, commented,

“Joe when you start monetizing don’t forget about the little guys who supported you on the way up.”





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Bitcoin

Bitcoin is an enterprise; its users are comparable to traditional shareholders, claims Goldmoney Founder

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Bitcoin: Age old discussion about Bitcoin being a commodity or security brought to life; Could it be a security?
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Bitcoin was conceived in the backdrop of banks bailouts and the 2008 financial crisis. The recession and the loss of faith in banking, financial institutions gave Bitcoin a platform to rescue the ones affected, giving them hope for a better financial system without the hassle of corrupt institutions. With the rise of Bitcoin’s fame, both in the darknet and in the mainstream, questions about its regulations had to arise.

The question was put to rest when the SEC/CFTC ruled Bitcoin as a commodity and taxed it. However, Goldmoney’s Roy Sebag brought this discussion up again recently in his tweet thread, where he said that Bitcoin as an enterprise is working towards its good, comparing its users to traditional “shareholders” among other things, while concluding that Bitcoin is a security. He tweeted,

“Is Bitcoin a security? <10 years old so regulators haven’t even had enough time to truly learn how it works (think Napster or Kazaa in early days). Miners are clearly issuing coins and responsible for governance, an absence of formal relations among them is irrelevant….”

In successive tweets, Sebag attributed miners with the role of “stewarding” the so-called enterprise. In return, these miners get paid in “direct fees” or in “share appreciation.” In Bitcoin’s case, it is the mining reward, which is “BTC”. Similarly, buyers are compared to “shareholders” with a common interest in the enterprise, i.e. profit. Sebag added,

“Coins trade at exchanges. The common enterprise is designed for the price appreciation of coin.”

Bitcoin could face a shutdown by the government, just like it did with big players in file sharing, said Sebag, who added that Bitcoin could also be interpreted as a security under the “34 act of the SEC.” The Goldmoney Founder concluded that “this realization rests on the belief that neither Bitcoin nor any common enterprise is truly decentralized.”

However, his inputs weren’t very well-received by many in the crypto-community. Casa’s CTO Jameson Lopp refuted Roy Sebag’s ideas, tweeting,

“Roy will believe what he wants to believe, though if he’s not actually participating in Bitcoin then his beliefs are irrelevant to its consensus formation.”





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