Bitcoin on the Chicago Mercantile Exchange vs Open Market
Note: CME does NOT trade Bitcoin but only virtual Bitcoin prices as all settlements are in USD! If I am not mistaken, their charter allows them or any of their account holders to NOT own any Bitcoin! So they only trade "virtual BTC".
Scenario 1
Exchange | Spot | Month 2 | Month 4 | Month 6 | Month 8 | Month 10 | Month 12 |
---|---|---|---|---|---|---|---|
CME | 10000 | 12000 | 10000 | 12000 | 10000 | 12000 | 13000 |
Is there any merit for such a scenario? Even so, it proposes an annual 30% ROI and will bring in big investors with billions of USD per accunt, and excite small investors to actually buy real Bitcoin instead of the virtual stuff on the CME. This will cause a rise in the price of real Bitcoin and cause a disparity between the CME and real markets.
Scenario 2
Exchange | Spot | Month 2 | Month 4 | Month 6 | Month 8 | Month 10 | Month 12 |
---|---|---|---|---|---|---|---|
CME | 10000 | 11000 | 12000 | 13000 | 14000 | 15000 | 16000 |
If this happens, many billions of USD will flow into the fund and affect other markets. But Bitcoin investors will snigger at the CME as the open market will NOT synchronize with this! So all CME credibility price fixing goes out the window and there will be some scrambling to save the virtual market as institutional investors feel shortchanged.
Scenario 3
Exchange | Spot | Month 2 | Month 4 | Month 6 | Month 8 | Month 10 | Month 12 |
---|---|---|---|---|---|---|---|
CME | 10000 | 12000 | 14000 | 16000 | 18000 | 20000 | 22000 |
If this happens, stock markets and financial markets fall as much more fiat USD and other currencies will flow into the CME fund and affect all the other markets, possibly breaking the economies of some small countries. Real investors will still thumb their noses as it is possible that in 2018 the market will really boom as it moves out of the Innovator Phase to the Early Adopter Phase and real BTC will be worth USD 40K-50K as predicted for end 2018.
Considerations
Can Bitcoin grow to USD50,000 in a year instead of being limited by CME prices? Will Cryptocoin enthusiasts appreciate any scenario that will try to affect the open market? Can the tail wag the dog? While the virtual CME casino attracts hundreds of billions of dollars from institutional investors, NO Bitcoin will actually be traded, NO value goes into the Bitcoin market! It will only serve as a vehicle to continue the financial interests of the incumbent powers manipulating fiat currency and be a huge disappointment. Such control is bound to fail as the ordinary person will buy real Bitcoin and cause a further disparity and rift between the classes. Ultimately, will the government step in to force some control? Probably. But that is another story!
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