The invisible force behind the cryptocurrency market: the power of a single price
In recent years, cryptocurrencies like Bitcoin and Ethereum have gained significant attention for their potential to revolutionize the way we think of money and transactions. Although many investors are attracted to the high growth rates and speculative appeal of these digital currencies, few realize that there is an even more powerful force at stake:
Premium of future
.
In this article, we will delve deeper into the cryptocurrency world and explore how one price can have a profound impact on negotiating decisions. We will examine the concept of futures award and its role in the formation of the cryptocurrency market.
What is Futures Premium?
Futures Premium, also known as “Futures Spread”, refers to the difference between two prices: the current price price (the price you buy or sell) and the future price (the price you would buy or sell a contract for delivery). In other words, it is the difference between the price you pay today and the price you can receive in the future.
For example, let’s say you are thinking of buying a bitcoin contract with a week’s due date. The price of the current site is $ 25,000, while the future price is $ 24,500. The future award would be:
US $ 24,500 (future price) – US $ 25,000 (cash price) = – $ 250
In this case, you would pay $ 2,500 to buy the contract today, but theoretically it could be sold for up to $ 26,000 in a week. This means that the $ 25,000 -cash purchase would give you a 13.8% return on the investment.
The impact of the future award on negotiation
Futures Premium has a significant impact on negotiation decisions, especially on the cryptocurrency market. Here are some ways in which it works:
- Speculative Investment : Higher future prices can make cryptocurrencies more attractive for investors looking for speculative gains. This is especially true during periods of high volatility or when traders believe the price will rapidly increase.
- Risk Management
: On the other hand, the lowest prices of the future may indicate that market feeling has changed and investors are becoming more cautious. This can lead to a decrease in purchase activity and an increase in sales pressure, which may be beneficial for traders who want to limit their losses.
- Order Flow : The future award also affects the dynamics of order flow in the cryptocurrency market. When there is a significant difference between future prices and sight prices, it can influence individual cryptocurrency price movement.
Real world examples
To illustrate the impact of the futures award on commercial decisions, let’s consider two examples of the real world:
- Bitcoin : During 2017, Bitcoin reached a historic rise at $ 19,666 before experiencing a significant correction to about $ 6,000. The scattered future was substantial, with a price difference exceeding 3,400%. This led to increased purchase activity and higher prices for individual currencies.
- Futures spread significantly, with a price difference of more than 7,000%.
Conclusion
The concept of futures prize is often neglected by traders and investors, but it is an essential aspect of the cryptocurrency market. Understanding how this phenomenon affects negotiation decisions, individuals can make more informed and potentially profitable investment choices with the complex dynamics at stake.
As the cryptocurrency market continues to evolve, it is essential for traders to be informed about the future award and their impact on price movements. By recognizing the power of this concept, we can get a deeper understanding of the complex forces that drive the market and make more deliberate commercial decisions.