Digital assets have all fallen victim to the bear markets. The persistent bear market has made sure to come down with stable assets like Lumber. 24 hours reports show that Lumber Futures have dropped to the lowest levels, just like in the pre-covid period.
On Monday, Lumber futures closed at $410.80 and on Tuesday at $429.30 per thousand board feet. This is more than a 70% drop from their peak in March.
What is Lumber?
Lumber is a general term for harvested wood. The wood is either heavy timber or cut into logs, or used for light-frame construction. However, the term is used in specificity to refer to logs cut using a sawmill.
In trade, Lumber Futures are contracts used to sell and buy a certain amount of wood that has been cut into planks and beams. Futures contracts are agreements between two parties to exchange goods using a set price. The contract is legally binding and occurs at a certain date in the future.
Today, Lumber accounts for 1% of the total global GDP; it makes about $600 billion of the world economy. The collapse shows that the global demand for Lumber is likely to increase in the future.
Statistics show that demand for Lumber will increase four times more within the next 30 years. It is therefore an important market asset.
What is the Importance of Lumber Statistics to Cryptocurrency Markets?
There have been rumours of recession in the crypto markets. Inflation is high and is continually increasing. Evidence of a recession is seen in assets like Lumber. Such assets show that the markets are resetting.
You can buy and sell Lumber futures via the Chicago Merchantile Exchange on the Globex platform. You can also trade them as CFDs. Lumber futures are monetary derivatives that might be traded with leveraged softwood marketplace exposure.
Hedgers and speculators alike are buying and selling lumber futures to manipulate danger or speculating through charge fluctuations.
CME offers traders a contract on the random lengths of the Lumbers futures. This makes it possible to trade the futures anywhere in the world. A random length of the futures equals 260 cubic meters of lumber. This is 110,000 board feet with the pricing of unit dollars per 1000 board feet. The contract usually expires in the months of November, September, July, May, March, and January.
Lumbers futures are used for several things:
As a hedge against inflation.
To diversify an investment portfolio.
To manage price fluctuations for stakeholders.
For speculative reasons in trading.
These are some of the use of Lumbers Futures.
Closing Thoughts
It is also important to know the importance of the assets being traded, for example, what is the real-life use of Lumber? Lumber is divided into two categories, softwood lumber and hardwood lumber. Some of the real-life uses include,
Construction Frames.
Finishing window, floors, and wall panel frames.
Firewood.
Charcoal.
Sawdust.
In conclusion, Lumber Futures are important to the market. It is important for you as a cryptocurrency investor to have knowledge of other digital assets in the market.
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