The Cindicator research group has released a 25-page report titled “Bitcoin Futures: Market Evolution.” In this report, Cindicator attempts to analyze whether Bitcoin futures contracts impact the price of Bitcoin. The full report can be read for free here.
Since their launch late last year, many traders have speculated whether the expiration of these futures contracts add volatility to the market or push the price in a specific direction.
On December 10, 2017, the Chicago Board Options Exchange (CBOE) launched the world’s first regulated Bitcoin futures product. One week later, on December 17, the Chicago Mercantile Exchange (CME) debuted their futures product as well. During the bull run of 2017, the birth of these futures contracts seem to have fueled Bitcoin’s bullish explosion up to its all-time high of $20,000. Coincidence or not, Bitcoin’s peak was on December 16, 2017 - one day before CME futures began trading.
Once the futures were operational, traders wondered how these contracts would affect the underlying price of bitcoin. Some compared bitcoin to gold, whose price declined once futures contracts were made available. Whether the futures contracts have a direct impact on BTC’s price is yet to be determined, so Cindicator attempted to calculate the influence futures expiration in their study.
In their report, Cindicator concludes that there is no confirmed relationship between futures expiration and bitcoin price.
The techniques used were simple. First, Cindicator graphed the seven-day period before the close of each futures contract. Then, they zoomed in to each period and visually determined if there were any similarities between expiration periods. Here is every futures closing period this year:
And here is what one period looks like, zoomed in:
Their visual inspection deemed that there was no relationship - so they decided to use stronger mathematical techniques.
Their next analysis included Regression and Correlation analysis on the returns between hourly periods and daily periods before and after the close of the contract. Despite their rigorous calculations, these analyses found that there was no correlation between the close of the futures contracts.
Overall, Cindicator determined that the technical analysis of bitcoin proved to be more influential on the price of bitcoin than the impact of the futures contracts. For example, if bitcoin was in a strong downtrend, this trend would continue whether or not there was a futures expiration.
Despite their findings, Cindicator admits that the futures volumes are still low, and that a trend could be found as their volume increases.
Cindicator is a prominent cryptocurrency research group advised by cryptocurrency veterans Charlie Shrem (founder, BitInstant) and Anthony Diiorio (CEO, Jaxx). Employing 60 full-time employees, Cindicator uses advanced data analysis to provide trading signals to their customers.
Cindicator’s flagship product, the Cindicator Bot, uses market sentiment to judge investment opportunities. On their platform, Cindicator surveys over 115,000 analysts on their opinion of the market in exchange for CND tokens. Then, A.I. is used to compile the data and predict where the market is heading. The bot can only be paid for with Cindicator’s utility token, CND, which currently trades for 366 satoshis ($0.024). The bot can be purchased for 5,000 CND/month, or roughly $120/month.