The first cryptocurrency futures contract is going live at 5:00 p.m. CT on December 10. And of course, it is for Bitcoin futures—the marquee name of cryptocurrencies.
This has hedge funds foaming at the mouth. Many have been waiting for a chance to short Bitcoin, and since futures contracts ease friction on the short side more than the long side, they finally have that option.
There are two endgames here.
- The short-sellers win. BTC prices fall from their perch of $11,700. Short-sellers get rich, but not before terrifying Bitcoin investors straight out of their long positions. Some of them flee down the list of competing altcoins, including to…you guessed it, Ethereum.
- The short-sellers lose. If BTC prices continue to rise, covering those shorts is going to become painful in a hurry. The only way to hedge those losses is to buy Bitcoin, of which there is a finite supply. This would cause the mother of all short squeezes. Bitcoin prices would explode upward, drawing more investors into the cryptocurrency space.
Daily Ethereum Chart
Ethereum would likely rise in both scenarios. Hence, the introduction of a Bitcoin futures contract is a tailwind for the currency. That is, unless, investors revive the old “one currency to rule them all” theory.
This theory stipulates that only a cryptocurrency with sufficiently wide popularity can act as a currency, but that it can only achieve that kind of popularity by absorbing its rivals. Therefore, through the organic evolution of markets, one cryptocurrency will rise above the others.
That theory faded into the background during 2017, but it could make a resurgence, and that could lead to excess concentration in Bitcoin. Barring that unlikely scenario, we see Ethereum prices lifting off from their current level.
Based on these conditions, we are comfortable holding onto our $1,500 Ethereum price forecast for 2018.
Source: Price Confidential