"The future is unwritten" Joe Strummer
Tonight starts the trading of bitcoin futures on the CBOE followed next week by the CME. Nasdaq and Cantor exchange, with binary options , will be shortly joining the frenzy of digital currencies as wall street jumps into the fray. This presumably will allow bigger players the opportunity for exposure to this exciting new asset class on both the long and short side. It may also gives us some important data on how institutions view digital currencies. As futures gain traction we will start to see a forward curve which i will point out is entirely different than a forecast. The forward curve tells us what we are willing to transact future business today. So what will the curve look like? I suspect the curve to be contango initially than gradually flattening. Keep in mind the contracts are not very long dated to start and are cash settled. The real question is how this will affect the spot market with all these fledgling electronic exchanges that will supply the data for settlement prices.
Will the spot price continue to rise as a hedge to futures buying? will it be driven by a function of FOMO (fear of missing out) or will the skeptics try to extract a pound of flesh from weak retail longs. This all remains to be seen, but I am reminded of the 17th century mathematician Blaise Pascal who famously put the condition on the belief of God into a formula of risk/reward. It makes me wonder; are so many Satoshites around the world ready to make their Pascal Wager?