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How do futures contracts affect Bitcoin prices?

Author

Listed:
  • Jamal Bouoiyour

    (IRMAPE-ESC Pau Business School; CATT University of Pau, France)

  • Refk Selmi

    (IRMAPE-ESC Pau Business School; CATT University of Pau, France)

Abstract

Bitcoin futures were launched by the Chicago Board of Options Exchange and the Chicago Mercantile Exchange group on December 18th, 2017. This study stands as a first attempt to explore the reactions of Bitcoin spot market to the launch of futures contracts. Using an event-study methodology and an adjusted asset pricing model, we show that Futures trading drove up the price of Bitcoin immediately after the announcement day. This reaction started to decrease noticeably following the launch of the futures contracts. Such outcome seems in line with the trading behavior that typically accompanies the launch of futures markets for an asset.

Suggested Citation

  • Jamal Bouoiyour & Refk Selmi, 2019. "How do futures contracts affect Bitcoin prices?," Economics Bulletin, AccessEcon, vol. 39(2), pages 1127-1134.
    • Handle: RePEc:ebl:ecbull:eb-19-00212
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    References listed on IDEAS

    as
    1. Selmi, Refk & Mensi, Walid & Hammoudeh, Shawkat & Bouoiyour, Jamal, 2018. "Is Bitcoin a hedge, a safe haven or a diversifier for oil price movements? A comparison with gold," Energy Economics, Elsevier, vol. 74(C), pages 787-801.
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    Citations

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    Cited by:

    1. Jamal Bouoiyour & Refk Selmi, 2020. "Coronavirus Spreads and Bitcoin's 2020 Rally: Is There a Link ?," Working Papers hal-02493309, HAL.
    2. Lyócsa, Štefan & Molnár, Peter & Plíhal, Tomáš & Širaňová, Mária, 2020. "Impact of macroeconomic news, regulation and hacking exchange markets on the volatility of bitcoin," Journal of Economic Dynamics and Control, Elsevier, vol. 119(C).
    3. Dun Li & Dezhi Han & Zibin Zheng & Tien-Hsiung Weng & Kuan-Ching Li & Ming Li & Shaokang Cai, 2024. "Does Short-and-Distort Scheme Really Exist? A Bitcoin Futures Audit Scheme through BIRCH & BPNN Approach," Computational Economics, Springer;Society for Computational Economics, vol. 63(4), pages 1649-1671, April.

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    More about this item

    Keywords

    The lunch of Bitcoin futures; Bitcoin prices; improved event-study methodology.;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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