Bitcoin futures opened the crypto currency market for skeptics. Previously, it was dominated exclusively by optimists. The ability to play on the fall of the crypto currency led to an influx of sellers and a collapse in prices. On the first day of trading in futures, on December 18,  bitcoin  cost more than $ 19,000. Since then, it has lost half of its value.

What will happen to  quotations  in the future? Now  traders have  the opportunity to  arbitrate , mining bitcoins and selling relevant contracts in the futures market. Let’s remind,  mining of  bitcoins is a competitive business that does not require special knowledge or intellectual property.

You may also like :

Accordingly, in the long term, the bitcoin miners (as well as the miners) should receive a moderate profit, sufficient only to compensate for their  costs . Unlike technology companies that have commercial secrets and market shares, miners can not theoretically receive huge profits for a long time. In other words, the equilibrium price of bitcoin will be slightly more than the cost of its production. If it is much higher (as it is now), arbitrageurs will enter the market   (as there are no obstacles for this) and receive a risk-free profit, extracting bitcoins and selling them in the futures market.

Easy money will attract other arbitrageurs. The process will continue until the bitcoin price approaches the fundamental value – in this case, the cost of extraction.

If the price falls even lower, the miners will begin to suffer losses and stop mining. Without the processing power and support of the miners, the system will eventually collapse, and the bitcoins will depreciate to zero. However, serious interest in crypto-currencies and the abundance of enthusiasts who are convinced of the prospects of bitcoin make such a scenario extremely unlikely.

Thus, the fundamental price of bitcoin for today is about $ 5000. It is sufficient that the miners compensate for the cost of production and receive a small profit. Over time, the equilibrium value will grow along with the costs of extraction. When all the bitcoins are mined, the price will begin to be determined by their role in the block economy.

The price may fall below the cost of production due to external factors. After news of the start of trading in futures  on the Chicago Stock Exchange  options  and the Chicago Mercantile Exchange Bitcoins quotes soared nearly three times. Then the crypto-exchange community was convinced that trading on large traditional exchanges would give bitcoin legitimacy and attract institutional money.

However, this activity has increased the attention of regulators, who are rightly concerned about illegal ways of using bitcoins, including money laundering, fraud and tax evasion. In South Korea and China – the main centers of the crypto-currency trade, – the authorities seriously toughened the position regarding virtual currencies. Even US Treasury Secretary Stephen Mnuchin said he would work with the G20 countries to prevent bitcoin from becoming the digital equivalent of an anonymous account in a Swiss bank.

Struggling with bitcoin will require coordinated and coordinated efforts of regulators, since the global device of the crypto currency allows it to survive if at least some countries (for example, Japan) retain their liberal attitude. In any case, bitcoin may face regulatory risks, which will be another potential factor in reducing its quotes.

However, the current decline in prices is more associated with the rudimentary state of technology. Blokchejn  is capable to make revolution in financial space, speed up speed, efficiency, to lower costs and to increase a transparency of transactions. Today this is as fair as a month ago, before the beginning of trading in futures. For people without access to banks or credit cards, bitcoin allows you to make payments around the world using smartphones.

In fact, the current collective decline of all crypto-currencies only fixes the status of bitcoin, as digital gold. It occupies a leading position in the world, where in the vast majority of transactions, various tokens are used, but they are all easily converted into the most famous and popular crypto currency.This special status of bitcoin supports its  purchasing power .

Over time, if the technology of the blockade will develop thoroughly, bitcoin will retain a key supporting role, and all its coins will be mined, prices will begin to rise. However, in the medium term, the equilibrium price reflects only the cost of mining.

Sharp fluctuations in quotations may cause bitmoins in the future to doubt, however, the current volatility  is only the first step in the process of price stabilization. Sooner or later, prices will approach the fundamental cost (extraction costs), and volatility will fall. Ultimately, this process can help the blockbuster and related crypto-currencies meet the expectations of enthusiasts and make a technological revolution.

You may also like :