Bitcoin Futures Markets Explained And The Defense Against Bitcoin Price Manipulation

Bitcoin Magazine

The Problem

Enemies with unlimited cash (The Federal Reserve Board or the International Monetary Fund, for example), can suppress the price of bitcoin; here, I demonstrate why their suppression can have only temporary effects. Exactly what price suppression can achieve, long term, is debatable and not the topic of this article. I will just explain how price suppression can be achieved in the short term, and why the strategy won’t work in the long term.

Futures Markets

Price manipulation can be accomplished through the cash-settled futures market. Here’s how: Imagine you have 1 bitcoin and wish to bet on its future price. Suppose the spot price is currently $50,000. You write a contract that in one year (you can choose other time periods, but let’s go with one year for simplicity), you will sell 1 bitcoin at $50,000 (you can actually set any price).

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