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An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

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Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#171

Post by etr-strike »

goialoq wrote: post #99
down wrote: post #58

all the "safeguards" the financial instruments have, didn't stopped them from crashing the economy in 2008, bitcoin is actually a response to that, I did lost my job then and had quite a hard time, now the same bankers tell me what is fraud and what is not. In my country banks moved away from their social propose lending, and they just take high commissions for everything (eg. ATM commission for seeing how much I hav…

If you had securities investments in 2008, your money is fine, as long as you held it for a few years before or after 2008. Only if you cashed out stocks in 2009 or sold your last house in 2010 would you be hurting. For the larger economy, there's no reason to expect Bitcoin would promote general economic health/growth more than national fiat currency.

Stocks only recovered because of unprecedented money printing by central banks across the world. That experiment is, at best, half over. I'll trust in bitcoin, thanks.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#172

Post by csomar »

mgbmtl wrote: post #167
csomar wrote: post #149

Earlier quoted context omitted.

That author is plain wrong and shows deep ignorance about bitcoin and the crypto-market. An unsustainable price of bitcoin will lead to the collapse of other exchanges since people cashing out on these exchanges requires enormous amount of real money. This will create a situation where the price of bitcoin in Bitfinex is higher than other exchanges by a big gap. This is not the case, actually the opposite is true: Bi…

Naive question: when an exchange sells, I assume they can decline to buy if they don't have a buyer or too much inventory? For example, if suddenly everyone wants to sell BTC, the price would drop, at which point the exchange could buy the BTC at a much lower price, or not buy at all? (unless they commit fraud, massively purchase BTC without having the actual money to back it, then not be able to wire money out of ou…

The exchange doesn't sell/buy. It just connects the buyers/sellers. There are brokers that do that but you can't call them an exchange. I also think regulation prevent exchanges from trading on their own exchange to avoid front-running and since they have lots of information about the users/deposits/etc...

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#173

Post by ric2b »

Zarath wrote: post #154
pentae wrote: post #142

Earlier quoted context omitted.

I can't wrap my head around this. Who is silly enough to sell bitcoins for 'worthless' Tether?

People who want a liquid USD tethered asset on many exchanges and aren't needlessly paranoid over absurd conspiracy theories that have yet to present a single ounce of real evidence.

Bitfinex is also lacking in evidence when it comes to showing that Tethers are backed by USD.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#174

Post by bcoates »

panarky wrote: post #112

When something doesn't make sense, usually it's because information is missing. Every market participant knows that Tether doesn't prove their reserves, and yet the market exchange rate to USD stays in a tight band between 0.98 and 1.02 across multiple exchanges. If the market doesn't trust Tether, then it should trade at a deep discount to USD, not at parity. Similarly, the conventional wisdom says cryptocurrencies…

Tether is how you short bitcoin -- it's hard to move USD out of exchanges, people are worried about a bitcoin (or "all cryptocurrencies") drop, so they move into tether hoping to buy back in after bitcoin goes down without having to do the expensive/difficult bitcoin-usd move.

This assumes that the price of bitcoin will go down but the rest of the system (exchanges, tether, mining, etc.) will stay intact.

As long as people want to short bitcoin there will be lots of demand for tether at a little over a dollar that the tether company will be happy to supply. These people will balance out anyone who wants out of tether in the short term, and it's impossible to lever your "tether goes down" position.

In the future, when people decide to turn around and sell in bulk for a little under a dollar, tether might not be able to make good, particularly if they were holding their balances in bitcoin instead of USD like they claim.

Bitcoin shorters might be willing to gamble that they can move faster than the tether market will collapse in that situation and not be the bagholder.

There's no way to short "the whole mess" aside from just not getting involved in the first place or trying to get your money out while you can.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#175

Post by rhino369 »

panarky wrote: post #112

When something doesn't make sense, usually it's because information is missing. Every market participant knows that Tether doesn't prove their reserves, and yet the market exchange rate to USD stays in a tight band between 0.98 and 1.02 across multiple exchanges. If the market doesn't trust Tether, then it should trade at a deep discount to USD, not at parity. Similarly, the conventional wisdom says cryptocurrencies…

>Similarly, the conventional wisdom says cryptocurrencies are in a massive speculative bubble. The negative sentiment on Bloomberg, WSJ, NYT, Twitter (not to mention HN) far outweighs the fanboys.

Sentiment of people not in the market (readers of WSJ, etc) doesn't really affect the price all that much. They didn't want to buy bitcoin at $4 they don't want to buy it at $14,000.

For mature markets, short sellers might do such a thing. But bitcoin is hard to short and the market is so irrational its risky to try. The CME might fix the former, but it won't fix the later.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#176

Post by panarky »

rsynnott wrote: post #116
panarky wrote: post #112

When something doesn't make sense, usually it's because information is missing. Every market participant knows that Tether doesn't prove their reserves, and yet the market exchange rate to USD stays in a tight band between 0.98 and 1.02 across multiple exchanges. If the market doesn't trust Tether, then it should trade at a deep discount to USD, not at parity. Similarly, the conventional wisdom says cryptocurrencies…

Bear in mind that this is bitcoin. People continued pumping money into mtgox for _months_ after it was clear to anyone who’d been paying attention that it was dead. And currently bitcoin’s in an unusually large bubble, so there are lots of people buying into it who’ve never previously had experience of it. I see ads for, basically, “get rich quick with bitcoin” every day now. The people clicking those are not the wor…

> Bear in mind that this is bitcoin

It's still a market, so market logic should apply.

> get rich quick with bitcoin

I see the same shit with real estate.

> sufficient people buying tethers at face value

It's a market. Smart money can sell tethers. When there's information that all market participants know, the market price should reflect that information.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#177

Post by bcoates »

panarky wrote: post #170
querulous wrote: post #136

Earlier quoted context omitted.

the market is extremely illiquid. even if you know it's a scam you have few options if you want to cash out. you can trade bitcoin for cash balances at various exchanges but actually withdrawing those balances is subject to miniscule daily/monthly withdrawal limits and if there's a run on the market those exchanges will almost certainly collapse. there's no significant over the counter market. you can swap your bitco…

> the market is extremely illiquid Trading is dominated by smart money -- whales, arbitrageurs, etc. Coinbase may have a lot of newbies buying 0.002 BTC, but these aren't the ones trading Tether. Whales and arbitrageurs have many facilities for withdrawing national currencies. They've completed the AML/KYC process. They have access to multiple banks in multiple countries. If the smart money knows Tethers are fraction…

To put downward pressure on the exchange rates the smart money would have to be holding tons of tether to liquidate in the first place -- is there any reason to believe they are?

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#178

Post by wslh »

jnbiche wrote: post #63
wslh wrote: post #48

Earlier quoted context omitted.

What is a Pegged Cryptocurrency? https://themerkle.com/what-is-a-pegged-cryptocurrency/ You can decide to talk about stable coin approaches which is a more precise term.

Sorry, that's incorrect information. I've been to several countries that have pegged their currency to USD or to (long time ago) Deutsche Marks, without every claiming to the same currency in reserve. It leads to currency black markets, but it's possible to do and many countries have done it in the past. I mean, even China had a currency peg not too long ago. It was an enforced exchange rate, nothing more. No explici…

Not in the cryptocurrency field. In this field pegging has a precise meaning.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#179

Post by aaavl2821 »

fosk wrote: post #160
aaavl2821 wrote: post #130

Earlier quoted context omitted.

From Wikipedia: "An economic bubble or asset bubble (sometimes also referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania, or a balloon) is trade in an asset at a price or price range that strongly exceeds the asset's intrinsic value." Seems like a reasonable description of bitcoin to me I have yet to see a well thought out, rational, specific description of the…

Is Gold in a bubble right now? Because the current price of Gold strongly exceeds the intrinsic value of the material and it has been like that for a while. Bitcoin has pivoted away from being a currency. Bitcoin is now a store of value, like gold.

gold has always been a weird instrument since it was decoupled from fiat currency, and it has a unique position because it has been around for a long time so investors sort of understand it. the value of gold is determined a lot by confidence in the asset's performance as a "non correlated" backup medium of exchange. there is a long track record here, which matters, despite how "soft" and "squishy" this line of thinking may seem to someone who doesnt work in markets. bitcoin doesnt have this: it is not widely used as a store of value, and it does not have a track record. basically, the perceived probability of it going to zero is infinitely higher than the perceived probability of gold going to zero

this article does a much better job than i just did: http://www.businessinsider.com/economist-jim-rickards-bitcoi...

and heres an intersting history of gold: https://www.investopedia.com/articles/investing/071114/why-g...

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#180

Post by empath75 »

panarky wrote: post #176
rsynnott wrote: post #116

Earlier quoted context omitted.

Bear in mind that this is bitcoin. People continued pumping money into mtgox for _months_ after it was clear to anyone who’d been paying attention that it was dead. And currently bitcoin’s in an unusually large bubble, so there are lots of people buying into it who’ve never previously had experience of it. I see ads for, basically, “get rich quick with bitcoin” every day now. The people clicking those are not the wor…

> Bear in mind that this is bitcoin It's still a market, so market logic should apply. > get rich quick with bitcoin I see the same shit with real estate. > sufficient people buying tethers at face value It's a market. Smart money can sell tethers. When there's information that all market participants know, the market price should reflect that information.

Markets are wrong all the time. See the dotcom crash, the 2008 crash, etc.
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