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Understand the validity of futures and their impact on cryptoman prices
In the world of cryptocurrencies, futures markets have appeared as an important player in price formation. One of the key components of these futures contracts is the expiration of validity, which can significantly affect the value of cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). In this article, we immerse ourselves in the concept of expiration futures, its impact on cryptoman prices and provide information to investors.
What are futures contracts?
The future agreement is a binding agreement on the purchase or sale of an asset at a predetermined price on the next date. In relation to the cryptomas of the futures contract, they generally include the exchange of cash settlement (known as “cash agreements”) in exchange for the offer of a specific amount of basic cryptocurrency.
Expiration futures
As for cryptocurrencies such as Bitcoin and Ethereum, validity applies to the point where the contract is worthless. This generally occurs after one year from the date of entry to the contract. There are two types of futures contracts:
Cash Agreement where it is not delivered and
delivery , where the investor has to physically obtain its cash settlement.
IMPACT ON CRYPTOMENIC PRICES
The validity of futures cryptomen contractors can have a significant impact on the price:
- This is because investors are not obliged to sell or buy at a default price, causing rapid price fluctuations.
- Council and price drop : The validity of futures contracts can lead to rapid prices in both directions. For example, if the Bitcoins contract expires without value on April 15, it is likely that the market experiences a strong decrease (or “point”) after May 16, followed by a reflection.
- Market response : After notification of the expiration of the contract, the contract can cause market response in both addresses. This may include sales pressure if investors expect prices to fall or buy pressure if they expect prices to increase.
Factors that affect the expiration of futures
Several factors can affect the expiration of futures cryptoman contracts:
1
- Treaty size : The size of the contract determines the potential impact on prices, with larger contracts that are more volatile than the smallest.
- Expiration dates : Contracts established for specific dates may be affected by factors such as vacations, economic events or regulatory changes.
Example: Validity of Bitcoin futures
To illustrate the impact of expiration futures on cryptoman prices, consider an example:
In April 2020, Bitcoin’s futures of May 7 expired. If the price of bitcoins remained stable at that time around $ 10,000, it would not be necessary to compensate or deliver cash. As a result, investors would not have additional costs or risks.
However, as the expiration date and prices began to fall below $ 6,000 (50 -day sliding average), the market feeling changed to Bears and the price of bitcoins fell from $ 10,500 to $ 3,600. A sudden loss of May 7, that investors did not expect, led to a strong increase in volatility.
Conclusion
Finally, the validity of futures is a critical factor that can significantly affect cryptocurrency prices. Understanding how these contracts expire and the factors that influence them are essential for investors trying to orient in the complex world of the cryptom market.