Even though the addition of Bitcoin Futures contracts on major financial exchange platforms such as CBOE has been regarded as a sign of mainstream adoption, some analysts believe that this might actually provide a huge opportunity for a pending short market. The potential fall that Bitcoin might go through as a result could lead to massive numbers of investors taking a short position.
A recent article from Bloomberg claims that the pressure to short the market comes from hedge funds which want to take advantage of arguably one of the biggest opportunities to short the market in history. Cryptocurrency investor Lou Kerner, a partner at Flight VC, declared:
“[It may be] one of the greatest shorting opportunities ever. You have a lot of zealotry, and a lot of people, including me, who think it’s the greatest thing to ever happen in the history of mankind. You have a lot of people who think it’s a bubble and a Ponzi scheme. It turns out both of them can’t be right.”
Regardless of the position that investors take, the addition of Bitcoin Futures contracts in the market will have a significant effect in making Bitcoin more adopted as a currency. Once the addition happens, the crypto market should see a stabilising trend.
However, another interesting thing could happen – a short squeeze. This would occur if Bitcoin, as it gets heavily shorted by a large number of investors, would see an increase in price which would lead to people who took a short position to ‘squeeze’ out of their position at a loss, and this would consequently drive up the prices even further due to increased pressure.