Bitcoin Cash Futures Volumes: A Prelude to the Recent BCH Price Appreciation

Over the last few weeks, there’s been a lot of attention focused on bitcoin cash (BCH) doubling in value and the $10 million worth of BCH-based futures being swapped on the Crypto Facilities platform every month. Last month, Crypto Facilities saw close to $50 million in BCH contracts. Since then, the popular Huobi exchange has also added BCH future contracts and traders can now take both long and short positions using the Huobi Derivative Market (Huobi DM).

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Huobi’s Derivative Market Adds Bitcoin Cash Futures Contracts

Interest in BCH derivative products has spiked considerably and bitcoin cash spot prices have been on a tear. On April 11, Huobi added BCH to the firm’s derivative listings and users can now short or long the decentralized cryptocurrency in order to bolster arbitrage and hedging positions. Huobi DM has done well since launching in Q4 of 2018 by offering weekly, bi-weekly, and quarterly cryptocurrency-based futures contracts. Previously the exchange only offered derivatives contracts for bitcoin core (BTC), ethereum (ETH), eos (EOS), litecoin (LTC), and ripple (XRP).

For the newly added BCH contracts, Huobi DM will offer a fee structure for BCH at 0.02% to open or close for makers and 0.03% to open or close for takers. Like traditional derivative platforms, the BCH futures will have price, order, and position limits. Moreover, the exchange provides real-time risk supervision, constant monitoring of contract prices, index prices, abnormal transactions, and positions. “With our sophisticated price limit mechanism, no clawback has occurred since its launch,” Huobi explained during the launch, adding:

Inclusion on Huobi DM means traders will be able to take both long and short positions on BCH, allowing for arbitrage, speculation, and hedging. Since 2017, Bitcoin Cash’s value has fluctuated between $75.08 and $4,355.62.

Smart Money Moving In

Bitcoin cash futures markets have seen significant growth over the last few months and Crypto Facilities, a subsidiary of Kraken exchange, has been swapping around $10 million worth of BCH contracts per month. During the first week of April, Crypto Facilities executive Sui Chung explained in an interview that BCH contracts in March saw close to $50 million. This week, on the blockchain broadcast Bloxlive.tv, the cofounder of the Affiliate Economy Token project Jason Fernandes explained why he thinks it’s important to look at the futures market to see where smart money is moving.

“Retail investors have always been kind of wild cards — sometimes they don’t behave rationally and it’s really a hype-driven cycle, whereas institutional investors are more disciplined and have a strategy in place,” Fernandes told the Bloxlive.tv host. “So if you were paying attention to the futures markets you would see the recent surge from bitcoin cash (BCH) and litecoin (LTC) wouldn’t have been a surprise.” Fernandes continued:

Bitcoin cash saw roughly $10 million per month and we saw that reflect in the price of bitcoin cash when it jumped up last week by something like 43%. I do believe this is a good way to see which way the smart money is moving.

In the last 12 months, BCH markets have enticed exchanges into offering BCH derivatives and traders can swap long and short positions on Bitmex, Crypto Facilities, Coinflex and now Huobi. On Bitmex, the BCH derivative allows traders to speculate on the future value of bitcoin cash with bitcoin core (BCH/BTC). Coinflex’ latest physically delivered cryptocurrency futures exchange provides users with leverage of up to 20x for bitcoin core (BTC), bitcoin cash (BCH), and ethereum (ETH) against the tether stablecoin (USDT). In the last 30 days, BCH has appreciated by +109.48% and is priced at $279 per coin today on April 14. To some spectators like Fernandes, the uptick of BCH contract volumes on derivatives exchanges one month prior to last week’s spike on spot markets was a reliable signal that smart money was moving in.

What do you think about Huobi adding futures markets and the recent BCH futures volume spike? Do you agree with Fernandes that it is a good way to see which way the smart money is moving? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, Jason Fernandes, Twitter, Crypto Facilities, and Huobi.

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