Futures Contracts (Discussed The Fun Way)

TL;DR

• Futures contracts are an agreement to buy or sell an asset at a specific price at a later date; and since the value of BTC has dropped in the past month or so, huge futures liquidations have happened.

Full Story

Let’s talk about futures contracts (but we’ll make it fun).

Futures contracts are an agreement to buy or sell an asset at a specific price at a later date.

For example, say Seb thought after BTC hit $73k last month, it might hit $80k by the 17th of this month (yesterday).

He might set up a contract to buy BTC at $73k, and come the 17th, he’d either be up for a killer deal (making $7k in the process) if we was right and it did hit $80k; or, he’d need to pay the difference between his buy price and the actual price.

Turns out, the price of BTC was about $61,200 on the 17th. Poor Seb.

(But that’s the risk you take!)

Bringing things back to the real world, according to Coinglass, about $220M worth of BTC liquidations have taken place over the past day.

Now, we’re about 2 days from the BTC halving.

If the BTC halving turns out to be a ‘sell the news’ event, chances are we’ll see more drops and more futures contracts liquidations.

On the other hand, if the past few days have been a sort of ‘sell the news of the news’ event, most of the major liquidations may have already happened.

Either way, while the price has fluctuated, nothing has changed about the fundamentals of BTC.

So the chances of it getting back up to that all time high price seem promising.

@Seb – ready to put on some futures contracts??