Bitcoin futures price: Can BTC price thaw continue despite crypto winter?
Bitcoin (BTC), the top cryptocurrency by market capitalisation, has seen a decline of over 70% since its November 2021 all-time high. As the bitcoin futures price chart is closely mirroring the BTC/USD chart, it has also seen a decline of more than 73% since November 2021.
How do bitcoin futures work and where could the bitcoin futures market be headed? Read on for our exploration of the subject.
What are bitcoin futures?
In short, bitcoin futures are a financial contract between two investors speculating on the price of the bitcoin cryptocurrency.
Bitcoin futures were created by financial group CME. They are USD cash-settled contracts based on the CME CF Bitcoin Reference Rate (BRR) – a once-a-day reference rate of the price of the bitcoin cryptocurrency in US dollars (USD). The product was launched on 17 December 2017.
The BRR accumulates the spot value of bitcoin in US dollars from a number of crypto exchanges within a one-hour calculation window of 16:00 GMT. It trades five days a week, excluding Saturdays from 17:00 to 16:00 Central Time.
According to CME, 1 BTC futures contract represents 5 bitcoin tokens. The contract has a regular tick of $5 per bitcoin and $25 per contract.
Each month, a new BTC futures contract is launched with a pre-determined set price. These contracts expire three months following their release date on the last Friday of a calendar month. The contracts trade on the Chicago Mercantile Exchange as well as other crypto exchanges.
CME claims that its BTC futures contract is an “efficient tool to access bitcoin exposure and manage its risk”.
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Bitcoin futures history: Past price action
Bitcoin futures historical data saw a bearish run in the first year of its launch, falling by 83.8% from $19,115 on 19 December 2017 to $3,100 on 14 December 2018, its all-time low.
Following months of sideways action, the BTC futures price started to gain traction. It surged 253.6% from $4,010 on 1 April 2019 to $14,180 on 26 June 2019. It continued to fluctuate between $10,300 and $12,800 over the following months before dropping to $6,565 on 17 December 2019.
At the start of 2020, many financial assets saw an initial selloff that led to a dip in the bitcoin futures price, with the contract’s value falling to around $3,800. However, the bitcoin halving event in May 2020 saw it surge past $29,000 by the end of the year.
The BTC futures price continued to grow in 2021, rising more than 1,275% from a low of $4,930 on 16 March 2020 to an all-time high of $67,830 on 9 November 2021.
At the time, bitcoin was seen as a popular means of investment and could be compared to the digital version of gold. Bitcoin was also viewed as a hedge against falling prices.
However, the bull run did not last long as the contract’s price started to rapidly decline in 2022 amid the outbreak of the war in Ukraine, soaring inflation and the US Federal Reserve’s (Fed) aggressive monetary policies. Today, BTC is seen by many as being comparable to stocks.
Since capping at $67,830 in November 2021, the BTC futures price fell by 73.3% to $ as of 11 November.
What’s affecting BTC futures?
In recent weeks, the bitcoin price has been affected by a surge in the US unemployment rate. Nonfarm payroll employment data released on 4 November 2022 showed that the rate had risen to 3.7% in October 2022, up 0.2% from the previous month’s statistics.
Bitbank crypto market analyst Yaya Hasegawa noted:
This could indicate the BTC price could start to stabilise and along with it bitcoin futures.
CoinLoan’s digital assets analyst, Max Shilo, noted that by looking at the BTC CME futures chart, it becomes obvious that the “price is staying in a tight range and isn’t moving much. It seems to be in a state of steady accumulation, waiting for some driving force to push it either way”.
Mike McGlone, senior commodity strategist at Bloomberg Intelligence, added:
In other bitcoin futures news, US inflation data is due to be announced on 10 November.
The data could highly influence the Fed’s future decisions on where they will head with their monetary policies, which in turn could affect bitcoin futures.
Hasegawa noted that a “slight move in CPI may not be enough to push up the price of bitcoin above key levels”.
Bitcoin futures price prediction: 2022 and beyond
Despite the latest downward price action, algorithm-based forecasting service Wallet Investor gave a bullish bitcoin futures price prediction at the time of writing (11 November). The site noted that BTC futures are “an awesome long-term investment”, adding that they have a long-term earning potential amounting to 395.72%.
Based on its analysis of past price performance, Wallet Investor predicted that the bitcoin futures forecast could reach $32,816.04 by November 2023 and $83,455.28 by 2027.
Gov Capital also gave a bullish bitcoin futures price prediction, expecting the contract to reach $64,139.92 by 2023, $191,810 in 2025. By November 2027 the forecaster predicted the price could be at $352,677.
Note that BTC futures price predictions can be wrong. Analysts’ and algorithm-based predictions shouldn’t be used as a substitute for your own research.
If you’re considering investing in the bitcoin futures market, we recommend you always conduct your own due diligence, looking at the latest news, a wide range of analyst commentary, technical and fundamental analysis. Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose.
Final analyst comments
CoinLoan’s Shilo was positive BTC futures could start a bull run soon:
Bloomberg Intelligence’s McGlone agreed that a positive run may be in the works, noting that if BTC CME futures fill in the current gaps the market is seeing at $28,000 and $35,000 a bull run may be coming up, noting:.
“Historically, any gaps have been filled without exception. I expect to see upside momentum with the first stop being 28k and from there we can go as far as 35k, which I think will be the mid-term run ending point.
“As an asset class, BTC has outperformed many blue-chip stocks that are down around 90% from their peaks, so if we see blue chip stocks going up in the mid-term, we can expect BTC to fill those gaps. This isn't as much of an ‘if’ as it is a ‘when’.”
How are bitcoin futures priced?
BTC futures are based on the CME CF Bitcoin Reference Rate (BRR) – a once-a-day reference rate of the price of the bitcoin cryptocurrency in US dollars. It is calculated within a one-hour window as of 16:00 GMT, and based on the data of multiple crypto exchanges.
Will bitcoin go back up?
No one can say for sure. At the time of writing, algorithm-based forecasting service Wallet Investor gave a bullish bitcoin futures price prediction, expecting the contract to reach $32,816.04 in 2023 and $83,455.28 in 2027.
Some analysts were also predicting a bullish run for the BTC futures price.
Note that their predictions can be wrong. You should always conduct your own due diligence before trading. And never trade money you cannot afford to lose.
How to invest in bitcoin futures?
Bitcoin futures can be bought on the Chicago Mercantile Exchange as well as other crypto exchanges. Remember to always do your own research before making any investment decision, and never invest more money than you can afford to lose.