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How Futures Trading Changed Bitcoin Prices

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How Futures Trading Changed Bitcoin Prices


5 min read
5 take-aways
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What's inside?

Bitcoin’s massive price gyrations have left investors feeling dizzy. 

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With cryptocurrencies the latest speculative rage, traders in 2017 pushed bitcoin from less than $1,150 to almost $20,000 in a matter of months. But after hitting fresh highs, bitcoin’s price reversed and plummeted in early 2018. Economists Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak and Patrick Shultz examine this phenomenon in the context of bitcoin futures trading that began in December 2017. While it never gives investment advice, getAbstract recommends this informative report to investors and traders interested in bitcoin’s ups and downs.


In 2009, financial and technology innovation introduced the world to bitcoin, a digital currency created on the foundation of the distributed ledger known as blockchain. Parties using bitcoin to conduct exchanges rely on blockchain specialists to maintain financial records. From January 2009 until February 22, 2017, bitcoin’s price remained tethered to levels below $1,150. Over the subsequent months, the cryptocurrency rocketed higher on a wave of speculation, ultimately reaching $19,511 on December 17, 2017.

On that day, the Chicago...

About the Authors

Galina B. HaleMarianna Kudlyak and Patrick Shultz are researchers at the Federal Reserve Bank of San Francisco. Arvind Krishnamurthy is a finance professor at the Stanford Graduate School of Business.

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