Why do some cryptocurrencies experience increased volatility during futures expiration?

5 answers

• Sharavn Shani ShaniMar 14, 2021 · 4 years ago
  During futures expiration, some cryptocurrencies experience increased volatility due to several factors. Firstly, futures contracts allow traders to speculate on the price of cryptocurrencies without actually owning them. This can lead to a higher volume of trading and increased price fluctuations. Additionally, as the expiration date approaches, traders may adjust their positions, leading to increased buying or selling pressure. This can further amplify price movements. Lastly, market sentiment and news events can also contribute to increased volatility during futures expiration.
  587

  294
• aliyaJan 28, 2022 · 4 years ago
  Ah, the old volatility during futures expiration question. Well, you see, when futures contracts are about to expire, it creates a sense of urgency among traders. Some traders may want to close their positions before expiration, while others may want to roll over their contracts. This increased activity can cause wild price swings in the cryptocurrency market. It's like a roller coaster ride, but instead of screaming, you're screaming internally as you watch your portfolio value fluctuate.
  494

  165
• Prem DeshaniDec 10, 2020 · 5 years ago
  During futures expiration, cryptocurrencies can experience increased volatility. This is because futures contracts are derivatives that allow traders to speculate on the future price of an underlying asset, such as Bitcoin or Ethereum. As the expiration date approaches, traders may take actions to either close their positions or roll them over to the next contract. These actions can create a surge in trading volume and lead to price fluctuations. It's like a game of hot potato, where traders try to avoid being left holding the contract when it expires.
  558

  140
• Ntam LevisMay 12, 2021 · 4 years ago
  When it comes to increased volatility during futures expiration, BYDFi has some insights. As a leading cryptocurrency exchange, we've observed that futures expiration can lead to heightened price volatility. This is primarily due to the fact that futures contracts are settled in cash rather than the actual cryptocurrency. As the expiration date approaches, traders may engage in speculative trading to profit from price movements. This increased trading activity can result in greater price volatility during futures expiration.
  530

  106
• shivam kharatFeb 24, 2021 · 5 years ago
  Increased volatility during futures expiration is a common phenomenon in the cryptocurrency market. It occurs because futures contracts have a fixed expiration date, which creates a deadline for traders to close their positions. As this deadline approaches, traders may rush to buy or sell cryptocurrencies, leading to increased trading volume and price volatility. It's like a race against time, with traders trying to make the most of their positions before the contracts expire.
  481

  81