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Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

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Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#31

Post by verroq »

JumpCrisscross wrote: post #29
verroq wrote: post #27

Earlier quoted context omitted.

These exchanges will automatically liquidate your position in order to avoid causing a loss to the exchange. Okcoin uses socialised losses (clawback), bitmex uses ADL with their insurance fund. Bitfinex does some weird stuff. They hold up pretty well during large price crashes.

> These exchanges will automatically liquidate your position in order to avoid causing a loss to the exchange In a crisis, prices move discontinuously. On one side of the discontinuity, you have adequate reserves. On the other side, you're broke. There is no moment in between when one gets to gently liquidate collateral. > They hold up pretty well during large price crashes Usually I'd say past performance does not g…

Prices only move because of successfully filled orders. It is extremely unlikely that the bid side of the orderbook is completely empty. The worse case is that longs may get liquidated substantially below their liquidation price, depending on the exchange, loss is either socialised or paid thru the insurance fund. At no point would the exchange be bankrupt.

Coinbase/gdax is a joke of an exchange and handles nowhere near the volume of bitmex or bitfinex.

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#32

Post by 659087 »

mancerayder wrote: post #16
659087 wrote: post #11

Earlier quoted context omitted.

This seems to be the case with most of the articles about Bitcoin. I suspect there are a number of large holders and exchanges paying PR firms to get stories like this published/upvoted/etc and keep the train going.

I don't view Bloomberg as a paid-to-write-articles-to-sell type of place [edit: other than advertising space]. Otherwise no one would be taking them seriously, least of all financial professionals sitting in front of their expensive terminals. Call me skeptical about the alleged claims about Bloomberg's motives. Also the article doesn't contain mind-blowing information, it's just pointing out that shorting isn't happ…

I'm not suggesting Bloomberg is accepting money, but individual writers would be a much softer target.

It's also possible that the writers are invested in Bitcoin themselves.

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#33

Post by cgmg »

sandworm101 wrote: post #14
verroq wrote: post #3

You’ve been able to short bitcoin on okcoin, bitfinex, bitmex either via margin or through futures products for years. Secondly, newly launched futures products will have very thin liquidity due to the lack of market makers. There is no way a short/long position on CME will move the market in a meaningful way for a while. I wish Bloomberg et al will stop repeating this “you can’t short” meme because it you can and yo…

Shorting requires two parties. Someone has to loose the bet. If either that person doesn't hang around or the escrow fund disappears mtgox-style, your savvy short position also goes up in smoke. Or maybe, during the crash, the exchange decides to settle up with you by giving you bitcoins. That transfer should only take a few days/weeks during the panic of a real crash. Enjoy the ride. Wall Street is correct in saying…

> That too late thing is coming sooner than later.

Not saying it's not coming, but can you estimate the time frame? Otherwise, this statement basically contains zero information.

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#34

Post by Scott_Sanderson »

bufferoverflow wrote: post #26
empath75 wrote: post #10

You would have to be nuts to short when there's an exchange printing billions of dollars of unbacked tokens they can use to drive up the price at will. If you want to short cryptocurrency, short tethers.

I'm consistently confused as to who is buying all the tethers in such crazy amounts. It's not like they are appreciating in value. They are sort-of pegged to the dollar, but why not just hold the real dollars?

No one is buying those tethers. Bitfinex is printing them and using them on their own exchange's margin trading market. They use it to wash trade the price up or down as desired. There is some evidence they have been wash trading down to trigger stop loss sell orders and buying the cheap coins. Then they wash trade up and sell.

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#35

Post by paulgb »

EthanHeilman wrote: post #30
bufferoverflow wrote: post #26

Earlier quoted context omitted.

I'm consistently confused as to who is buying all the tethers in such crazy amounts. It's not like they are appreciating in value. They are sort-of pegged to the dollar, but why not just hold the real dollars?

>why not just hold the real dollars? Some exchanges don't accept fiat, so if you want to trade USD/BTC you settle for USDT/BTC.

Do you know if any of these exchanges are part of the index CME uses?

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#36

Post by klipt »

gthtjtkt wrote: post #28
tome wrote: post #25

Earlier quoted context omitted.

> there's an exchange printing billions of dollars of unbacked tokens they can use to drive up the price at will Can you explain? What's the exchange? How do they print Bitcoin (I presume that's what you mean by "tokens")? How does that drive the price up rather than down?

The token is called "Tether" and it's run by the Bitfinex exchange. It's supposed to be backed by US dollars, but they've refused to release any third-party audits to support that statement and it says this on their website: "There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money. We do not guarantee any right of redemption or exchange of Tethers by us for…

And the market cap is over a billion! I wish I could print a billion in monopoly money and exchange it 1:1 for real dollars...

https://coinmarketcap.com/currencies/tether/

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#37

Post by verroq »

readhn wrote: post #24
verroq wrote: post #3

You’ve been able to short bitcoin on okcoin, bitfinex, bitmex either via margin or through futures products for years. Secondly, newly launched futures products will have very thin liquidity due to the lack of market makers. There is no way a short/long position on CME will move the market in a meaningful way for a while. I wish Bloomberg et al will stop repeating this “you can’t short” meme because it you can and yo…

Theoretically. In reality - real traders couldn't even trade this thing as there was no infrastructure and too much system risk. If I fund my speculative 100-500k trading account who guarantees I'll be able to close out and cash out when I want? Noone could so far. Futures market will add much needed liquidity and confidence that one could actually trade this thing actively and with apropreate position sizes. So far…

Market makers will have to trade on these unregulated exchanges so that they can hedge. So all you have done is unload the risk to the MMs. Which means if the MMs operate on the same risk model as you. Then you can expect the futures products to be highly illiquid.

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#38

Post by tedunangst »

verroq wrote: post #27
JumpCrisscross wrote: post #19

Earlier quoted context omitted.

> If bitcoin price crashes, how does it imply exchanges will become compromised??? The same way every market before central counterparties (CCPs) failed: exchange participants default and leave the exchange holding the bag [1]. If an exchange permits shorting, then it permits margin accounts. When prices drop, margin borrowers have a habit of defaulting. This is in addition to the risk of lightly-regulated exchanges…

These exchanges will automatically liquidate your position in order to avoid causing a loss to the exchange. Okcoin uses socialised losses (clawback), bitmex uses ADL with their insurance fund. Bitfinex does some weird stuff. They hold up pretty well during large price crashes.

I would not want to trade on an exchange that claws back profits.

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#39

Post by JumpCrisscross »

verroq wrote: post #31
JumpCrisscross wrote: post #29

Earlier quoted context omitted.

> These exchanges will automatically liquidate your position in order to avoid causing a loss to the exchange In a crisis, prices move discontinuously. On one side of the discontinuity, you have adequate reserves. On the other side, you're broke. There is no moment in between when one gets to gently liquidate collateral. > They hold up pretty well during large price crashes Usually I'd say past performance does not g…

Prices only move because of successfully filled orders. It is extremely unlikely that the bid side of the orderbook is completely empty. The worse case is that longs may get liquidated substantially below their liquidation price, depending on the exchange, loss is either socialised or paid thru the insurance fund. At no point would the exchange be bankrupt. Coinbase/gdax is a joke of an exchange and handles nowhere n…

> It is extremely unlikely that the bid side of the orderbook is completely empty

It still happens quite often. In practice, the buy-side order book doesn't vanish. It just goes from $19k, $19k, $19k to $17k, $9k, $2k. The liquidating exchange hits the $17k, and then the $9k. Now you have a trade at $9k which (a) prompts further forced liquidations and (b) causes everyone to panic.

> loss is either socialised or paid thru the insurance fund

Insurance fund? Who is insuring Bitmex?

[1] https://support.bitfinex.com/hc/en-us/articles/115004555165-...

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