Cindicator, a US-based fintech company that develops hybrid intelligence (human + artificial intelligence) for effective asset management, released on Oct. 18 a report called “Bitcoin Futures: Market Evolution.”
The Study’s Objectives
The study investigates whether there is a correlation between the price movements of Bitcoin and Bitcoin futures after their launch on CBOE and CME last year. It consists of two parts: the first one conducts an analysis of the Bitcoin (BTC) trading volumes on the most popular crypto exchanges and the volumes of Bitcoin futures. The second part is focused on Bitcoin price movements around futures expiry dates, attempting to identify evidence of recurring market behavior and patterns during that period.
Prior to its launch, the crypto community was particularly torn about the implications that Bitcoin futures would have on the digital currency’s price volatility and, eventually, its growth toward mainstream adoption. Bitcoin futures would provide the regulated environment that institutional investors seek, in order to invest in crypto assets that are generally surrounded by uncertainty. After a thorough look at the volume data, however, Cindicator’s study found that futures are still not a common instrument of exposure in cryptocurrencies, and it speculates that institutional investors may be ignoring the risks and invest in cryptocurrency exchanges directly.
Study Concludes – No Concrete Evidence of Correlation
After a detailed month-by-month analysis since the Bitcoin futures’ inception, Cindicator came to the following conclusions:
- Market trends and technical levels can be significantly more impactful on Bitcoin’s price in respect to the price movements near futures expiration dates.
- There is no tangible evidence that Bitcoin’s price always dumped before futures expiries and pumped right after. It could be valid to take it under consideration when outlining trading strategies during specific market phases, though opening or closing positions based on these price movements in fast market phases have proved to be ineffective.
- The bearish trend and lowered volatility on Bitcoin trading could attract more institutional investors. Therefore, increasing popularity may change the importance of rolling futures and their impact on Bitcoin’s price movements. This analysis should be reconsidered when futures and over-the-counter trading volumes start to converge.
Simon Keusen, head of analytics at Cindicator, said:
“Looking at the past movements of Bitcoin’s price, we can see that there is no golden rule for trading based on futures expiration dates. The overall market trends can influence Bitcoin prices in a much stronger way. Our conclusions from this research are a good representation of the overall value we seek to provide to crypto investors by presenting different reasons for why certain market movements might happen and encouraging doing research and using analytical tools.”
Cindicator’s hybrid intelligence platform provides forecasts on crypto and traditional markets based on a wide set of machine-learning models and neural networks. It is aimed at improving investment decisions by utilizing predicting analytics and sentiments as a result of the symbiosis of humans and artificial intelligence.