Stonegate Digital Capital Group is the Premier Multi-Strategy Family of Funds in Blockchain Technology and Cryptocurrency Investing
Although the price of Bitcoin does seem to continue rising, unfortunately Bitcoin and other investments don’t increase in a straight line. There’s volatility along the way.
Institutional investors use futures and other instruments like options, and strategies like short selling, to hedge out this risk and volatility. The implementation of futures on Bitcoin paves the way for institutional investors to participate in the cryptocurrency asset class in a meaningful way.
Futures are also used for hedging commodity risk and currency risk. For example, think about major grain producers (farmers), who use commodity futures to hedge risk in crop production. Further, international companies that sell products in a global marketplace use currency trading and currency futures to hedge currency risk when accepting a foreign fiat currency for their products. This is HUGE for the cryptocurrency space related to merchant acceptance of cryptocurrencies for consumer products. Major retailers must have a way to hedge cryptocurrency (downside) risk when accepting crypto for payment of merchandise. Otherwise, if Amazon accepted Bitcoin for a widget that was worth $100 USD, and the price of Bitcoin suddenly drops, then the retailer loses money on the sale of that widget. They need a mechanism for hedging this currency risk. Futures on Bitcoin provides this mechanism and opens the entire world of global consumer products sales to the potential for accepting Bitcoin for merchandise transactions. This particular use case for futures on Bitcoin is enormous and will have even more of a significant impact on Bitcoin and the cryptocurrency space as a whole, versus institutional investors participating in the cryptocurrency asset class.