Understanding Futures Expiration And Its Impact On Prices

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Understanding the expiry date of the foules and its impact on cryptocurrency prices

In the world of cryptocurrency, future contract markets have become an important player in pricing. One of the main components of these future contracts is the expiry date, which can significantly affect the value of cryptocurrency, such as Bitcoin (BTC) and Ethereum (ETH). In this article, we will delve into the fouling at the end of the expiration date, affecting the prices of cryptocurrency and giving an insight into the investors.

What are future contracts?

The Future Agreement is a binding contract for buying or selling assets for a predetermined price in the future. In the context of cryptocurrencies, Furucer Agreements usually include exchange of money settlement (known as “cash settlement”) in exchange for supply of certain amounts from the underlying cryptocurrency.

Future expiry date

When it comes to cryptocurrencies such as Bitcoin and Ethereum, the expiration date concerns the point where the contract becomes worthless. This usually happens after one year from the expiry of the contract. There are two types of future contracts:
Money settles where no delivery is involved and
Delivery where the investor should physically receive money.

Impact on cryptocurrency prices

Cryptocurrency Future Contracts may have a significant impact on prices:

1
Nutrition : When the Future Agreement expires worthless, it becomes a “zero non -profit” contract, resulting in increased volatility in the market. This is because investors are not obliged to sell or buy at a predetermined price, causing the price to fluctuate rapidly.

• Price pins and downs : The end of the Future Contracts can lead to quick price movements in both directions. For example, if Bitcoin’s contract expires worthless on April 15, it is possible that the market will have a sharp decline (or “Spike”) after May 16, followed by a rebound.

3
Market Reaction : When announced the term of the Future Agreement may cause a market response in both directions. This may include pressure sales if investors expect prices to drop or buy pressure if they expect prices to rise.

Factors affecting the expiry date of the foules

Several factors can affect the term of the term of the cryptocurrency’s future contracts:

1
Market mood : Investor mood and market expectations play an important role in determining the probability of expiration.

• The Size of the Agreement

  : The size of the contract determines the potential impact on the prices, the higher the contracts are more volatile than smaller.

3
Expiry date : Agreements set for specific dates may be affected by factors such as holidays, economic events or regulatory changes.

Example: Bitcoin Future expiration date

In order to illustrate the effects of the foules on the expiration date on the prices of cryptocurrency, let’s consider an example:

In April 2020, Bitcoin’s future contracts expire on May 7. If Bitcoin’s price had remained stable at about $ 10,000 at that time, there would be no need for money to pay or delivery. As a result, investors would not have been exposed to additional costs or risks.

However, as the expiry date was approaching and prices began to fall below $ 6,000 (50 -day changing average), the market mood became beard and Bitcoin price fell from $ 10,500 to USD 3600. Sudden loss of value on May 7, which investors did not expect an increase in volatility.

Conclusion

In conclusion, the term of future contracts is a critical factor that can significantly influence the prices of cryptocurrency. Understanding how these contracts end and the factors that affect them are essential for investors who want to navigate the cryptocurrency market in the difficult world.