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Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

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Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#31

Post by homakov »

raverbashing wrote: post #20
JanSt wrote: post #8

Earlier quoted context omitted.

To me, the Lightning network looks like a terrible idea. It achieves nothing that an increased blocksize would not have done on-chain yet wraps a faster-layer around the slower, deliberately crippled (1MB) blockchain and does require multi-hop liquidity that must be provided by interested parties. My understanding would be that the slower layer (like TCP) would be stacked on the faster layer (like IP). The lightning…

My opinion exactly It's not a "terrible idea" it is what should have existed in the first place in the oficial blockchain They're just adding a 2nd layer on top, calling it official and then saying "bitcoin is working"

It should _have_ existed, but the idea came around only about 2015? It's evolving slowly. But if it were "built-in" would be a lot better of course.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#32

Post by generalizethis »

It's ironic that wall street spent so many years saying Bitcoin is worthless, but is buying-in when it's lost its use case to competitors within cryptocurrency, and really is useless (except as a speculative vehicle or "store of value"). I guess BTC can fork infinitely, so there's that.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#33

Post by capex »

gchokov wrote: post #2

Can’t really wrap my head around the rise of BTC in futures trading, as they are all cash settled. In other words, pure betting and gambling with the futures, as they really do not touch the underlying BTC. I guess, just a regular day in the massively manipulated crypto currency world...

Or, just a regular day in the massively manipulated futures trading market...

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#34

Post by camillomiller »

gchokov wrote: post #16
camillomiller wrote: post #4

Earlier quoted context omitted.

Crypto might even be manipulated, but in this case what’s the issue? I don’t get your logic. Some independent financial entity decides to start trading futures on horse manure. That makes horse manure a heavily manipulated underlying financial product?

Well. You will see what manipulation means when the first contracts are about the expire!

Mid-january then?

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#35

Post by nostrademons »

gibybo wrote: post #6
gchokov wrote: post #2

Can’t really wrap my head around the rise of BTC in futures trading, as they are all cash settled. In other words, pure betting and gambling with the futures, as they really do not touch the underlying BTC. I guess, just a regular day in the massively manipulated crypto currency world...

The markets are not as independent as they might seem. If the futures market gets ahead or behind of the other BTC markets, it creates opportunities for arbitragers to profit from the difference which has the effect of reducing the gap. It doesn't matter that they are cash-settled. For example, if lots of money start pouring into Bitcoin futures, the futures price will rise above the price on BTC exchanges. It will t…

I do wonder how counterparty risk will be priced into the futures contracts. There've been a number of cases - Mt. Gox, Bitfinex, any Chinese/Korean/Zimbabwean exchange if you're not a resident of that country - where you can sell a Bitcoin for a nominal price on the exchange but not be able to withdraw that money into the fiat financial system. That's led to structural differences in prices between exchanges which don't get arbitraged away because potential arbitrageurs can't get their cash into or out of the exchange. What happens if that happens to institutional investors trying to settle futures contracts?

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#36

Post by zodiac »

JanSt wrote: post #8
sliverstorm wrote: post #5

Earlier quoted context omitted.

Just the next step from the Bitcoin economy, to the Bitcoin Standard economy, to the eventual Bitcoin Fiat economy. Seriously, the Lightning network looks a lot like the old Gold Standard, and the arc of Bitcoin seems to be reinventing modern currency, so I'm trying to figure out what's next.

To me, the Lightning network looks like a terrible idea. It achieves nothing that an increased blocksize would not have done on-chain yet wraps a faster-layer around the slower, deliberately crippled (1MB) blockchain and does require multi-hop liquidity that must be provided by interested parties. My understanding would be that the slower layer (like TCP) would be stacked on the faster layer (like IP). The lightning…

> It achieves nothing that an increased blocksize would not have done on-chain

It lets one party in a channel send arbitrarily large numbers of payments ("arbitrary" subject to the total payment value being capped to the channel capacity, as well as to the Bitcoin divisibility) to another without increasing the UTXO set as you would on-chain.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#37

Post by [deleted] »

tehlike wrote: post #15
flatline wrote: post #9

Earlier quoted context omitted.

I agree, and I'm skeptical of Bitcoin on many levels. The vision it offers is very attractive, but each so-called feature comes with so many caveats that it's never clear there is a real advantage. Still, I think people hold onto the vision. As digital cash, I can buy something online more or less anonymously, without a middle man. Well, except for the miners. And my anonymity is blown if the person from whom I purch…

IF you want privacy, there are alternative coins that are fairly active with development: Monero, zcash, etc. I am not endorsing anything, but i believe the privacy & fungibility are important in a digital currency. On the sad side, people who put money in bitcoin are thinking it's a great investment. This is not to devalue your comment, but for the past 10 years, almost every years, the low lows have been increasing…

[deleted]

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#38

Post by 6nf »

basicplus2 wrote: post #23

So what happens when the entire earth's energy production is required to produce the next bitcoin and there is therefore no further bitcoin mining?

This cannot happen. Bitcoin difficulty adjusts to match current mining power so it can't get out of control like that.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#39

Post by esarbe »

sametmax wrote: post #25
idibidiart wrote: post #19

Is this just legalized gambling?

That's pretty much what people use stock market for anyway. Most investors are no warren buffet, they bet at best on educated guesses.

You are talking about speculators. Anybody that holds an financial instrument for less than five years (my definition) is a speculator.

Warren Buffet is an investor. He buys a business (he thinks) he understands and then holds on to it while it generates profit.

It really bothers me that - in business terms - investors are nowadays just lumped together with speculators.

Investors try to build something while speculators just try to make money, no matter the cost to anybody else.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#40

Post by LrnByTeach »

I am trying to understand risks with arbitrage for professional traders with BTC spot (at Coinbase gdax) and CBOE Futures contract.

Let us say, some professional trader "Short sell CBOE Future contract & Buy BTC Spot at Coinbase simultaneously"

At the time of this writing, Futures contract short sell @ $18700 and BTC Spot buy @ $16700 simultaneously. http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures

you wait one month for the Futures contract to expire (Jan 17 th) , let us examine two scenarios by contract expiry Jan 17 th .

case 1: Bitcoin price shoots to $25,000

case 2: Bitcoin price drops to $8,000

In both cases on the futures contract expiry date that is January 17 th 2018, bitcoin Futures price and Spot price will be almost same ( give or take $100)

In both cases professional traders profit is $2000 for each futures contract on the investment of $16,700 Spot + $10,000 future initial price.

That is $2000 profit on $26,700 investment for one month period , that works as 7% return per month, annualized 84% . You may need to deduct cost of money that is interest on investment or loan say 6% per year .

One risk I see is, on the Short sell Futures contract, if the bitcoin is keep rising in price , trader needs to supply more money to meet the margin call ( just a technial issue because he is gaining on the LONG Buy bitcoin spot price )

Am I missing some thing ??

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