What is the Possible Future of Crypto Futures?

Bitcoin futures have been trading on the Chicago Mercantile Exchange since 2017, and they have become an important aspect of trading analysis, but they have failed to predict major corrections in the cryptocurrency markets. The launch of these futures followed Bitcoin’s meteoric rise in value, and it was designed to give institutional investors a more stable way to bet on the digital currency, but the volatility of the market has kept the futures trading away from many.

Now that various cryptocurrency exchange platforms have launched their own version of futures trading for alternative tokens, technical analysts are seeing patterns indicative of future corrections and bearish periods. These futures are part of a new type of financial instrument which has only been traded for a couple of months, and it is still not clear whether they will ever transform into a significant market, but if you combine them with lending rates in the United States, you are looking at what could be considered as a market crash indicator.

There are two types of futures. The first type are based on specific assets, such as Bitcoin futures, a financial product which settles on a certain date and price. The second type are based on the overall cryptocurrency market. The futures based on the overall market are not as new, but they have never gained much momentum. With regard to altcoins, the specific underlying assets regularly trade on major exchange platforms, and when their futures are mostly being written by short sellers, traders should pay attention to how much it is costing them to take out margin positions.

Trading on margin means borrowing money, and the currency borrowed is usually the greenback. When the U.S. lending rate rises, cryptocurrency investors are not as keen on taking positions that would require them to tap their margin accounts, which means that they would be more likely to flock to altcoins than Bitcoin. By the time you see altcoin futures trending up, it may be too late for Bitcoin to recover, and institutional investors would probably hit the sidelines for a while. This is why altcoin futures and the U.S. lending rate could give you a heads up in terms of a Bitcoin correction.