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It is now possible to trade bitcoin hash rate futures

May 15, 2020

Bitcoin (BTC) holders now have a new tool to take advantage of the growing ecosystem of the largest cryptocurrency Two new futures markets are opened.

In a blog post on May 15, the derivatives platform FTX confirmed that it has launched a futures product that follows the hash rate rather than the Bitcoin price.

FTX has first bitcoin hash rate futures

Simply called “Hashrate Futures”, Contracts capture the average difficulty of the Bitcoin network every day from the beginning to the end of each quarter.

It is now possible to trade bitcoin hash rate futures
It is now possible to trade bitcoin hash rate futures

Difficulty is used, not the hash rate, because as FTX emphasizes, An exact measurement of the hash rate is not possible.

“However, since the difficulty settings try to keep the block times of 10 m, For long periods of time, the average hash rate is proportional to the average difficulty“explains the blog post.

That means in general Difficulty futures should behave similarly to hashrate futures.

The hash rate refers to the computing power that is made available to the Bitcoin network at a specific point in time. The more hash rate performance there is, the stronger and more secure the network is.

The difficulty of mining is an expression of how complex it is to solve equations that validate Bitcoin transactions.

Bitcoin 7 day average hash rate 1 month chart

Graph of Bitcoin’s average hash rate every 7 days. Source: Blockchain

Both were close to all-time highs, however The hash rate dropped after the bitcoin subsidy was halved this week. However, at the time of going to press, the FTX hash rate product outperformed. Contracts for the first quarter of 2021 rose from around 16 to 21.5 a day.

Contracts expiring in the third and fourth quarters of 2020 rose 6% and 13%, respectively.

The value of the contract is calculated based on the difficulty of a particular day, dividing the number by 1 billion to get a two-digit number.

Bitfinex takes advantage of the increase in BTC market capitalization

FTX joins Bitfinex cryptocurrency exchange to expand the futures market. Last week, The platform released futures related to bitcoin dominance compared to altcoins.

This relationship is also changing in favor of BTCAccording to CoinMarketCap, this now corresponds to 67.4% of the cryptocurrency market. Bitcoin has managed to maintain a dominance of at least 60% since July last year.

At the same time commentators demonstrateciting data that The amount of bitcoin held on exchanges is falling, which in theory tends to improve price developments.

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