Why are bitcoin futures trading for higher prices than bitcoin itself

Wondering to know about why bitcoin futures are trading for higher prices than bitcoin itself? Well, we are here to answer your question.

We all know that in the current time nothing is more trending and popular than that of bitcoins. Almost everyone, especially youth of the current generation are investing in bitcoins at an alarming rate.

So, let us have a brief discussion about the reason behind bitcoin futures trading for higher prices.

Arbitrage opportunities:

Currently, in the productive market, arbitrageurs are making profits without any risk. In such cases, arbitrage traders can sell and buy bitcoins in the spot market and earn more than enough amount of profit irrespective of how the price of bitcoin moves.

Circuit breakers:

Circuit breakers represent a difference between the spots and the future markets. On Bitcoin's debut on the CBOE market, two circuit-breakers were triggered, resulting in trading being halted for some time. When the price gained 2%, there was a 2-minute halt and for a 20% gain, there was a 5-minute gap. There was a drastic increase in the price of bitcoin which almost resulted in a third circuit breaker (30% gain) getting triggered.

The high margin requirements, the presence of circuit breakers and evolving nature of Bitcoin futures could be one promising reason why traders have not involved so much into Bitcoin futures. Click here to know more about Bitcoin margin trading.

Lambos, Bling and Mansions-What purchases do Crypto Millionaires make:

Currently, the hottest topic around cryptocurrencies is what people can actually buy with Bitcoin.

With its 10th birthday, it actually came into existence in the market and people could buy some expensive things with bitcoins.

Here, let us talk about an incident. Laszlo Hanyecz ordered two pizzas from Papa John's for 10,000 BTC back in 2010. It goes to show how much progress has been made in eight years — especially when you take a look at how much you would pay for those same two pizzas with Bitcoin today.

Bitcoin bling:

There are so many people who are madly in love with finer things such as jewellery and other expensive items. Here comes a great news for jewellery lovers. Now, it is possible to buy jewellery with cryptocurrency.

Diamond retailer Samer Halimeh New York has been accepting crypto payments for jewellery since September 2017.

It is mainly for the customers who want to buy jewellery worth more than $1 million.

Booking your seat:

Bitcoin can also be used to book seats and purchase a variety of tickets, from big events to good plane tickets.

Earlier this year, an American NFL fanatic was able to buy front row tickets for the Super Bowl through an online platform. The transaction cost $19,000, which was 2.2 BTC at the time, and the website that facilitated the purchase made a special effort to accept the cryptocurrency for the first time.

A popular website named "CheapAir" allows the customers to pay for their airfares via Bitcoins, Bitcoin cash, Dash or Litecoin.

Something about Spot price:

Along with buying and selling, it is very important to understand that arbitrages chances are only ideal in a perfect market, still Bitcoin market is not so productive.

Different price differences are due to different exchanges. Apart from everything, Bitcoin margin trading is at an alarming rate in countries like Zimbabwe and other countries.

With considerable price differences at various exchanges, traders should consider the reference rate to use in futures trading. For instance, CBOE used an exchange rate at Gemini while CME futures contracts utilized the index of several exchanges. Analysts envisage the planned Nasdaq Bitcoin futures will base its futures contract on the price of Bitcoin from more than fifty sources.

Final words:

So, it was all about bitcoin future trading at higher prices.

The article was intended to clear your all the doubts about the reason behind bitcoin futures trading for higher prices than bitcoin itself. If you still have any doubts or queries, just feel free to contact and ask us. If you think that there can be some additional details which should be added here, must share with us. It will be good to have a two-way conversation.

Hope the content must have helped you to get to know a bit more about bitcoins and the reason behind bitcoin futures trading for higher prices than bitcoin itself.

Prateek Kulhari

Prateek is a business editor who writes about various topics such as technology, health and finance. At Pressly, he works along with the colourful folks that build a nation through tech startups. He is also a professional football player and video games enthusiast.