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The effect of CME Bitcoin futures on Bitcoin price



The price of one actual Bitcoin on the open crypto market, known as spot BTC, fluctuates based on a countless number of factors, such as trading volume, usage and adoption. However, other catalysts affect the asset in a roundabout manner. Cash-settled Bitcoin futures trading products from the Chicago Mercantile Exchange stand as one arguable highly referenced indirect element contributing to Bitcoin’s (BTC) price direction. 

“The Bitcoin derivative products offered by CME are simply a vehicle for accredited investors to place sophisticated and risk-offsetting trades that would otherwise be inaccessible to them,” Shawn Dexter, a decentralized finance analyst at Quantum Economics — a markets analysis firm — told Cointelegraph on Oct. 8. “This leads to both, short-term and long-term impact on price.”

CME Bitcoin futures trading at its simplest

At the height of Bitcoin’s largest bull run to date, the CME launched cash-settled Bitcoin futures trading, on Dec. 17, 2017. Cash-settled futures, however, involve no actual spot BTC. They simply let traders bet on the future price of Bitcoin without utilizing the underlying asset.

For example, let’s say Bitcoin’s spot price sits at $10,000 per BTC at the beginning of a month and ends that month at $11,000. Buying one CME Bitcoin futures contract (equivalent to the price of five Bitcoin) when BTC’s price is at $10,000 and holding through expiration at the end of the month means the trader will receive $55,000 in cash at the end of the month, not actual Bitcoin.

Since trades involve no actual Bitcoin sales or purchases, these futures products logically may not seem like they should impact Bitcoin’s spot price. In reality, however, these futures do weigh on Bitcoin’s price, according to Dexter:

“In the short term, any price impact caused by a hefty purchase in the futures market will be quickly arbitraged away in the spot market, causing prices to converge. But this could just as well happen if the hefty purchase were to occur in the spot market first.”

At times, Bitcoin trades at varying prices on different exchanges based on events, order book demand and other factors. If a large enough price discrepancy exists, a trader might buy BTC for a lower price on one exchange and sell it at a higher price on a different exchange. This activity is called arbitrage.

Bitcoin’s price on CME futures would likely rise noticeably if someone bought a large number of Bitcoin futures contracts on CME. This does not directly move Bitcoin’s spot price, although eager traders would then go buy or sell spot Bitcoin at a cheaper price as an arbitrage opportunity, driving up the spot price in tandem, according to Dexter. This concept works for a number of scenarios between CME and spot BTC.

On a larger time horizon, the CME’s Bitcoin futures trading products affect Bitcoin’s spot price more significantly, Dexter explained, adding: “The CME products allow for increased price stability and decreased risk. This is bullish for Bitcoin since it allows larger investors to get involved in the market with less hesitation. Thus increasing liquidity and stability.” Essentially, CME’s BTC futures add money to the market from large mainstream traders and other participants while also allowing them to hedge their trades.

An explanation from a regulator

Derivatives trading markets for commodities can affect their respective underlying spot markets, according to Heath Tarbert, chairman of the United States Commodity Futures Trading Commission. Derivatives include futures trading products. “Sometimes, the price of cattle is actually set in the derivatives markets,” Tarbert told interviewer Anthony Pompliano on Oct. 7 as part of a segment during the LA Blockchain Summit. Cattle and Bitcoin are both considered commodities. Tarbert added: “People say, ‘Well the futures contract on cattle says it should be x amount per head, and, therefore, this is what the price should be in the real market.’”

Some commodity futures are physically settled, however, involving the transfer of the underlying asset after expiration, thus, differing from CME’s Bitcoin futures trading products. Including similar findings, investment firm Wilshire Phoenix released a lengthy report on the CME BTC futures topic on Oct. 14, 2020, citing the conclusion: “CME Bitcoin Futures contribute more to price discovery than its related spot markets.”

What about the CME gaps?

The crypto space gives significant weight to CME gaps. A gap occurs on the CME Bitcoin futures chart when Bitcoin’s spot price moves while the CME Bitcoin futures markets are closed for the weekend or the holidays. If CME’s Bitcoin futures open for trading after a big move from Bitcoin, a gap is left on the chart between the listed price when the CME closed and the price of BTC when it opens.

The crypto space often expects Bitcoin’s price to return to such levels, “filling” any gaps on the chart. “Price does not need to trade in both directions through a gap to be considered filled,” Dexter explained. “A gap is considered filled as long as it meets the previously traded price before the gap.”

Trading is largely about probabilities. Probability favors gaps fills, according to Dexter, although he added, “It is important to note that gaps don’t necessarily have to be filled,” as gaps exist in the same category as other chart patterns:

“The previously traded price on CME prior to any gap could be construed as Bitcoin’s fair market price. Furthermore, depending on the type of gap, market participants are likely to open and/or close positions at the previously traded price, hence causing the gap fill.”

Contrary to the market’s sentiment favoring gap fills, however, Melvis Langyintuo, a client solutions strategist at OKCoin, told Cointelegraph on Oct. 6 that CME Bitcoin gap fills are unlikely due to the CME’s lack of Bitcoin futures trading volume in comparison to crypto-native derivatives exchanges.

In the last 30 days, the CME’s Bitcoin futures have yielded roughly $433 million in average daily volume, according to Langyintuo. In contrast, popular crypto derivatives exchange BitMEX often hosts over $1 billion in 24-hour trading volume. Over the last 24-hours, BitMEX’s Bitcoin perpetual swap futures product has hosted almost $1.4 billion in volume, based on numbers posted on the exchange. Several other high-volume crypto-native derivatives exchanges also exist, and these exchanges trade throughout the weekend while the CME Bitcoin futures do not, which adds to the equation.

“This makes the CME gap non-consequential compared to the BTC potentially filling the gap,” Langyintuo said. “The CME BTC prices are either trailing the BTC price moves or they are a bet on where the CME BTC market may reopen on Monday,” he added. “Trading CME futures into the weekend is akin to essentially placing a weekend ‘put’ or ‘call’ on gap to capture that spread,” he explained, referencing a similarity to Bitcoin options trading — another type of derivative seen on the CME and in the crypto space. Langyintuo concluded:

“For price to fill the gap, there would need to be a lot of volume on both the bids and offer side of the futures contract before the weekend, and on Sunday, once the market resumes trading, the same levels of volumes would need to be maintained in order to normalize the gap in a smooth fashion.”

A vast number of forces impact Bitcoin. A conclusion can be difficult when it comes to how much impact any specific driver has, although in this case, it seems as though the CME’s Bitcoin futures may affect Bitcoin’s spot price on a number of levels.

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Here’s Why Analysts Think Bitcoin Will Rally Towards $17,000 by EOY




  • Bitcoin’s price has been caught within a consolidation phase around $13,000 ever since it was rejected at its recent highs of $13,200
  • This is around the price at which it has been trading throughout the past few days, with buyers and sellers being unable to take control of its near-term trend
  • Yesterday, bulls did attempt to set fresh yearly highs and kickoff a leg higher, but it resulted in a rejection
  • This shows that buyers don’t currently have enough support for another push higher
  • One analyst explained that a push towards $17,000 could be just months away, but it may first see some consolidation

Bitcoin and the aggregated crypto market are consolidating following Bitcoin’s recent rejection at its yearly highs.

The cryptocurrency has been unable to spark any sustained moves past $13,200, signaling that the selling pressure here is significant and may continue slowing its ascent.

Despite its short-term trend being somewhat unclear, there’s no questioning that Bitcoin’s macro trend is shaping up to be extremely bullish.

As such, one analyst is noting that a move to $17,000 could be just a couple of months away.

Bitcoin Consolidates Around $13,000 as Buyers and Sellers Reach an Impasse

At the time of writing, Bitcoin is trading down just over 1% at its current price of $13,000. This is around where it has been trading throughout the past few days.

Yesterday, bulls attempted to break this trend and propel it higher, but a move past $13,300 resulted in an influx of selling pressure that sent it reeling lower.

Its inability to see any sustained rally does indicate that the selling pressure it is facing above its current price level is quite significant.

Where it trends next should depend largely on whether or not it can push past the resistance laced throughout the lower-$13,000 region.

BTC Poised to See a Sharp Climb to $17,000, Claims Analyst

Despite this micro weakness, one analyst is noting that Bitcoin is positioned to see some major upside in the months ahead.

He is specifically pointing to $17,000 as a target that he expects to be reached by the end of the year.

“I think this is a likely scenario, not expecting a clear breaker above $14,000 yet. A retest of previous resistance zone to build momentum towards the next rally towards $17,000 beginning next year.”

Image Courtesy of Crypto Michael. Source: BTCUSD on TradingView.

The coming few days should provide insights into whether or not the resistance Bitcoin is currently facing will be enough to spark any selloff.

Featured image from Unsplash.
Charts from TradingView.

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How to build a crypto mining rig in 2020 to earn Bitcoin and Ether




In a time of global crisis, a pandemic, and a generally unstable political and social environment, cryptocurrencies have shown remarkable stability. Moreover, the pandemic-induced economic downturn played into the hands of the industry by not only attracting professional cryptocurrency traders but also reviving mining as a way of generating passive income. 

It is not surprising that countries experiencing difficult political and economic situations have witnessed a boom in the purchase of GPU cards in recent months. In the region of Abkhazia, where all crypto activities have been illegal since 2018, citizens spent more than $500,000 on mining equipment over a period of six months.

Another factor that has worked to further popularize mining is strong crypto prices. Bitcoin (BTC) has risen by almost a third, while Ether (ETH), the most popular currency for mining, has added $150 to its price and the decentralized frenzy has meant that gas fees have reached unprecedented levels.

So, here’s how to design a cryptocurrency rig — and an exploration of whether it needs to be done at all, given all the associated risks.

Mining rig components

A cryptocurrency mining rig consists of a computer that has many graphics cards but no monitor. Computer cases are filled with GPU cards, a power-generating unit, a motherboard and a cooling system. If a monitor is connected, it can become a regular computer where a user can open a browser or play their favorite video game.

The rig is connected to the internet, and thus, the blockchain network. The network operates by itself to conduct monetary transactions using the power of the graphics cards. To be more specific, a mining rig consists of:

  • An ordinary motherboard, which has the capability of linking to a number of connectors for GPU cards.
  • A hard disk drive, or HDD, with 100 to 250 gigabytes of memory to house the cryptocurrency wallet, with an Ether wallet usually taking up 25 GB and a BTC wallet requiring 50 GB or more.
  • Several GPU cards, which are the most important components in a rig because they are the base that defines the cryptocurrency that a user will mine, along with their future profit and its timeline.
  • A power-generating unit. A rig with four GPUs often requires more than one power unit. Usually, miners have a few 750-watt units connected together.
  • A power adapter for GPU cards. Video cards are connected to the motherboard using special extension cards called “risers.” There are many different types and models of risers, but the PCI-E 1x version 006 is the most popular.
  • A power switch.
  • A cooling system, and it’s preferable to have several coolers to provide additional airflow.

Another important detail is the frame for the rig. It is better to make a frame out of wood or aluminum. The size of the mining rig will be slightly larger than its frame due to protruding parts, adapters and a cooling system. For example, a seven-GPU rig will be approximately 21 inches wide (53 centimeters), 12 inches deep (30 centimeters) and 12 inches high (30 centimeters).

After purchasing all the components of the rig, it’s time to design it, which is a rather easy task for a person who has experience with computer hardware. Additionally, there are plenty of guides on YouTube.

When a rig is ready, all that needs to be done is to install some software — i.e., to choose a program for mining the currency of preference. Another way is to find a mining pool, which is a popular way to mine, as it’s becoming harder to do so individually due to the rising complexity of crypto mining. There are also some tools available such as TeamViewer, for remote control, and WatchDog, which automatically restarts the system if the program freezes.

GPU card in the top

As a rule, one rig should include four to seven video cards — it’s a number that will not go beyond the framework of a stable operation, although there are exceptions. Miners can connect 10 to 15 GPU cards to one motherboard, but seven is the optimal number because Microsoft’s Windows 10 operating system can detect only this number of cards. But there is a solution: specialized mining software based on the Linux kernel. In that case, the key is to choose the right motherboard, such as an ASRock Pro BTC+ series or similar.

Determining which GPU cards are best for mining is not so straightforward, as the answer depends only on the amount of money that the miner has. In general, it makes little sense to buy the most expensive, powerful GPUs for the price of two to three slightly weaker ones, as there is a greater chance the cheaper ones will bring more benefits due to their low power consumption and initial cost.

The highest income in mining is currently achieved with Nvidia GeForce RTX 2080 Ti and AMD Radeon VII cards, but it is more profitable to build a mining farm with AMD Radeon RX 580 and Nvidia GeForce GTX 1660 Super cards, as they will pay off much faster.

Related: The top crypto-mining graphics cards to get a big bang for your buck

It should also be kept in mind that AMD RX series GPU cards can be flashed by changing the working time of the RAM, downvolting the core and overclocking. Programs such as MSI Afterburner and Sapphire TriXX can assist in making these manipulations, which will help GPU cards achieve maximum performance during the mining process.

Electricity in question

In over 10 years, the mining industry has turned from something incomprehensible and rather cheap to a professional, high-tech venture that implies high barriers of entry, not only for the equipment but also for its maintenance.

After purchasing mining equipment, paying the cost of electricity during its operation becomes the main expense that directly affects profitability. The energy consumption of one mining rig consists of the following components:

  • GPU cards, depending on the power and mining algorithm, consume between 360 watts and 1500 watts for a rig of six to seven cards.
  • The motherboard, power unit, HDD and RAM consume up to 100 watts.
  • The cooling system uses from 20 watts to several kilowatts when using air conditioning systems.

So, how can a miner reduce the cost of electricity? The main consumers of electricity are the GPU cards, and with the right settings, electricity consumption during mining can be reduced significantly. For example, when mining Ether, the main thing is to overclock the video memory. The most optimal operating mode for GPU cards is setting the core voltage to about 830 to 850 millivolts for AMD cards and 650 to 850 millivolts for Nvidia cards. Lowering the voltage on the core of the card, in addition to reducing power consumption, decreases the amount of heat, which has a beneficial effect on the equipment.

Power-generating units can also use less power if they have a “gold” certificate, which means they save a large amount of electricity (about 15%) compared with power units that lack them. Another way is to change HDDs to solid-state drives, which will increase the speed of loading the operating system and reduce the power consumption of each rig by five to 15 watts. Furthermore, modern RAM (DDR4 or DDR3L instead of DDR3) and processors can reduce consumption by another 10 to 20 watts.

A miner can also reduce consumption through slightly more complicated ways too, such as finding more economical electricity tariffs — for example, installing the rigs where there are reduced tariffs for consumers with electric stoves or electric heating and lower night-time prices. If possible, miners can even reach out to a power plant that generates electricity to find out if it has surplus capacity. Some miners can create their own solar or wind farms and use them for mining, but not everyone can afford such an investment.

Mining in the cloud

Keeping in mind the unstable situation in the economy, some may want to join the crypto mining community but cannot due to the high initial costs associated. Here’s where “hosted mining” can come into play, whereby cryptocurrencies are mined through a remote connection to equipment that has been rented out. Philip Salter, head of operations at Genesis Mining — a cloud mining provider — told Cointelegraph:

“Since mining is becoming more competitive, margins are shrinking and it’s harder for home miners to compete. Miners need to get every drop of efficiency they can, and that means growing the operation (economies of scale) and doing it somewhere where electricity is insanely cheap. […] Mining in the cloud seems like the only viable option for many.”

Hosted mining starts with a user choosing a provider of computational capacity. Then they enter into agreements with the company to connect to its equipment. After paying for computer capacity, miners are provided with access to remote mining of cryptocurrencies through rented equipment. So, users only need a computer and a fast internet connection to operate. Hosted mining commissions are charged in accordance with the agreements established between the parties.

This type of mining has a number of advantages, such as not requiring start-up capital, not needing to connect equipment by yourself, no costs of maintenance and electricity, the ability to disconnect from work at any time, and not needing special technical knowledge and skills.

There are also risks in cloud mining, primarily because, like any young industry, many rogue actors seek to take over the funds of ignorant users. So, when choosing a platform, users should spend time and carefully study its history and reviews.

Also, hosted mining brings in lower income compared with mining using one’s own equipment. Nevertheless, this is a possible option for those who really want to get involved in mining because, in any case, no one will give up an opportunity for passive income, even if it’s not too significant.

Buil it on your own

In summary, it can be said that today, mining seems to be an attractive way to make some income. If for some reason hosted mining is inconvenient, then setting up a personal rig is not too difficult. This will require an initial investment and a little time to figure out how the system operates.

Randy Ready, CEO and chief technology officer of Mining Rig Rentals — a hardware mining rental platform — believes that building your own system certainly is more interesting, adding: “I suggest going with a small rig and potentially going larger once you are familiar with mining and have a stable profit.”

Disclaimer. Cointelegraph does not endorse any content of product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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3 reasons Bitcoin suddenly dropped 3% in 1 hour and recovered




Three factors likely triggered a quick decline in the price of Bitcoin (BTC) on Oct. 25. First, traders pinpoint the $13,300 to $13,500 area as a major resistance range. Second, futures and options markets are neutralizing. Third, weekend trading is seemingly amplifying volatility.

The $13,300-$13,500 range is a key resistance area for Bitcoin in the short term

Before the sudden price drop occurred, BTC soared from $13,127 to $13,350. The dominant cryptocurrency rallied swiftly to an area of interest for sellers as more miners moved BTC to exchanges.

Throughout the past week, data from ByteTree shows Bitcoin miners have been selling more than they mine.

BTC possibly saw a sharp correction as it surged to a key resistance range, which sellers aggressively defended.

Some technical analysts anticipated the price of Bitcoin to rise to around $13,500 before seeing a pullback. Before the volatile price action occurred, cryptocurrency trader Cantering Clark said:

Upside borrowing/leveraged long exposure will be more prevalent the further up this goes, but right now futures are consistently extended from spot and the friction is obvious. Maybe get one more pop up 13.5-13.8 before a nice sized pullback.”

2-hour price chart of Bitcoin with key support levels. Source: TradingView, Michael van de Poppe

Futures and options markets are neutralizing

After the week-long rally, the futures market started to show signs of overheating. Although the funding rate of BTC remained at an average 0.01% level, alternative cryptocurrencies demonstrated high funding rates.

The overall cryptocurrency futures market needed pullback to reset or cool down the funding rates of top cryptocurrencies. The Bitcoin Fear and Greed Index is also showing “extreme greed” in the market, which makes a healthy pullback a positive trend for BTC.

Bitcoin Fear & Greed Index. Source:

Weekend trading typically spurs volatility

Meanwhile, the options market also faces expiration worth $750 million in about six days that could trigger volatility.

During the weekend, particularly on a Sunday, the volatility of Bitcoin and the cryptocurrency market tends to increase.

There are many potential factors that could cause volatile price movements to occur. Two main factors are lower the volume during the weekend and the anticipation of the Sunday weekly candle close.

If the price of Bitcoin stays over $12,000 in the next 15 hours, it would mark the first weekly candle close above $12,000 since January 2018.

Weekly price chart of Bitcoin. Source:

As such, while BTC continues to see high volatility, the optimism surrounding its high time frame log charts are buoying the general market sentiment.

One popular technical analyst known as “Squeeze” emphasized that the macro view of Bitcoin remains optimistic, particularly as exchange BTC balances continue to drop reducing available supply. He said:

“Bitcoin’s macro view remains bullish as the Exchange $BTC Balances continue to decline sharply since March (whales are not yet selling. Even at $13,000.) There’s also around 136k BTC currently locked in WBTC/RenBTC.”

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