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When do bitcoin futures expire?
When do bitcoin futures expire?
Bitcoin

When do bitcoin futures expire?

By Marco Cavicchioli - 27 Feb 2021

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Many bitcoin futures contracts have an expiration date. These contracts are basically used to buy or sell bitcoin in the future at a fixed price in the present and therefore have a specific expiration date at which the settlement occurs.

However, there are also so-called perpetual contracts, i.e. futures contracts without an expiry date. This type of contract does not require that the trade order be executed on a specific date. 

In both cases, however, they are derivative financial products that replicate the price of the underlying asset. Futures such as bitcoin have BTC as their underlying, so their price replicates that of BTC. 

Perpetual contracts are often used for trading and speculation, particularly by those who do not want to deal directly with the asset but prefer to trade derivatives. Traditional futures contracts, on the other hand, are also used to hedge against risk, as they allow the future buying and selling price to be pre-fixed in the present. 

In addition, there are bitcoin futures that are settled in BTC on expiration and others that are settled in dollars. 

How does the Bitcoin futures expiration date work?

The expiration date of traditional futures contracts depends on the issuer. That is, the issuer of these contracts actually also decides their expiration date. 

In the traditional financial markets, there are two major issuers of bitcoin futures contracts in particular: CME Group and Bakkt.

The ones with the largest market, i.e. the largest trading volumes, are certainly those of the CME Group, which are traded on the world’s largest derivatives exchange, the Chicago Mercantile Exchange (CME). 

The fact is that not only are they traded on the world’s leading derivatives exchange, they are also settled directly in dollars. That is, on expiry, the payment from the buyer to the seller is made in USD. 

These are probably the bitcoin futures contracts that have the greatest impact on the BTC market. 

They expire monthly, on the last Friday of the month. Settlement takes place on the Monday following expiry. 

Since they were launched in December 2017, the price of bitcoin has often fallen significantly a few days before expiry. It is possible that there is some correlation between the two events, although this has not yet been proven with certainty. 

Bakkt futures, on the other hand, are traded on Wall Street, the New York Stock Exchange (NYSE), and are settled in BTC. This may be one of the reasons why they have been less successful so far, although a second, dollar-settled version has also been created. 

These contracts expire on the third Thursday of the month, with settlement taking place the following day.

 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 25 thousand subscribers.

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