Does the Use of Cash-Settled Futures Affect the Underlying Bitcoin Spot Price? ▴ Learn

Does the Use of Cash-Settled Futures Affect the Underlying Bitcoin Spot Price?

Yes, the use of cash-settled futures can indirectly affect the underlying Bitcoin spot price. Futures markets provide price discovery and can influence sentiment.

Large trading volumes in futures can lead to arbitrage opportunities, where traders buy or sell in the spot market to profit from the basis difference, thus linking the two markets. However, the direct supply and demand dynamics of the spot market are not altered by a cash settlement.

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