Former CFTC Chair Chris Giancarlo: Futures Bring Bitcoin (BTC) Out of the Dark

The presence of a futures market offers a more reasonable, gradual growth for investors.

Bitcoin futures signal the maturation of the market, stated Chris Giancarlo, former chair of the Commodities Futures Trading Commission and one of the mainstream Bitcoin (BTC) proponents. He stated that the futures markets have grown significantly in the past year, to about 50% of the spot market volume.

Giancarlo sees the futures markets as a source of new liquidity, which, however, may not push up the prices in speculation.

“At the moment, the $200 billion market capitalization of crypto probably represents only about $10 billion of real money invested—the rest is paper profits. This is one source of instability that makes crypto prices volatile. If open interest in regulated futures continues doubling, it represents a steadily increasing source of real money to stabilize prices.”

“That doesn’t mean it will push prices up—a point often missed by crypto enthusiasts—but it does mean whatever prices result will be more reliable,” commented Giancarlo.

BTC futures are now evolving, with different types of markets. The fully regulated CME futures and the Bakkt market by the ICE are one side of the equation, which are still attracting tentative volumes. BitMex and Binance futures are coming in from the fully crypto-based side.

Giancarlo also sees futures as a stabilizing force, because of the types of traders flocking to the markets. The traders are all well-capitalized entities, and not day-trader speculators. Traders include miners, dealers, venture investors, issuers, lenders, businesses, who seek to manage the risk of their portfolios.

The Bakkt futures have stabilized at a few hundred BTC, while the CME futures have been used to predict the monthly move of the BTC market price. The rise of futures on almost all major exchanges also arrives with the possibility for earning interest on crypto lending, further establishing stabilizing forces on the markets, instead of short-term speculation.

Giancarlo still believes crypto assets need to prove themselves via the success of the underlying technology. He added that crypto startups may succeed even without speculative trading.

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