On Friday, the Chicago Mercantile Exchange’s cash-settled Bitcoin futures contract for the month of November was reported to have expired by a number of analysts. While these financial derivatives are cash-settled, analysis by a top cryptocurrency trader suggests that the expiry of the monthly futures means that BTC has a positive price trajectory into the coming two weeks.
CME #bitcoin futures expiry today expecting volatility
— Cryptoboy™️ (@Crypto_Boy1) November 29, 2019
Why BTC Price Likely to Surpass $8,000 Next Week
Popular CNN-featured trader Luke Martin recently released an analysis about the expiry of CME monthly futures and their effect on the BTC price. He found in his research (which factored in data going back to the June 2018 expiry) that BTC largely trends positively in the one or two weeks after the expiry of a future; Bitcoin sees a 2.9% average gain one week after expiry, and a 3.9% average gain two weeks after expiry.
Next $BTC CME expiration is on Friday 11/29.
I charted out price returns before & after expiration since the contracts started trading.
Takeaway: Generally experience selling pressure before and positive returns after. pic.twitter.com/bK6gp2h4sH
— Luke Martin (@VentureCoinist) November 25, 2019
Yes, an average 2.9% gain in a week isn’t that much by cryptocurrency standards, but these statistics show that Bitcoin’s directionality in the coming weeks should be positive should history repeat itself.
Martin’s analysis of the CME expiries corroborates other bullish analyses that have been proposed by investors in the industry. For instance, Velvet, a trader who partially foresaw the decline of BTC to under $8,000, then $7,000, wrote that he thinks Bitcoin is looking extremely bullish right now.
Per previous reports from NewsBTC, he remarked that BTC has finished a five-phase wave pattern, has bounced off the golden Fibonacci Retracement level at the 50-day moving average, and is in the midst of a giant falling wedge — all telltale signs that the cryptocurrency is about the surge higher. His chart implies a move to $8,600 in the coming days.
CME Futures Net Negative for Bitcoin?
While the expiry of the futures may be a net positive in the short term for the price of Bitcoin, some analysts are certain that the CME’s contracts are actually suppressing BTC from a long-term perspective.
Speaking to popular industry content creator Ivan on Tech, renowned Bitcoin educator Andreas Antonopoulos, said that the CME futures market likely has much to do with the decline in the price of BTC over the past two years:
“We know for a fact that when the Bitcoin bubble started to go up really fast in 2017, the U.S. Treasury decided to fast-track the deployments of futures markets in order to stop that bubble.”
This isn’t only a theory. Former Commodities and Futures Trading Commission chairman Christopher Giancarlo said in an interview with CoinDesk that it was the “CFTC, the Treasury, the SEC and the [National Economic Council] director at the time, Gary Cohn,” that popped the Bitcoin bubble by allowing for Bitcoin futures to be launched.
He elaborated, stating, “We saw a bubble building and we thought the best way to address it was to allow the market to interact with it.”
Even the San Francisco branch of the Federal Reserve has corroborated this, revealing in a report published in the middle of 2018 that the “rapid run-up and subsequent fall in the price [of Bitcoin] after the introduction of futures does not appear to be a coincidence.”