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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

#81

Post by [deleted] »

Scott_Sanderson wrote: post #34
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?

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.

[deleted]

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

#82

Post by bufferoverflow »

ufo wrote: post #76
bufferoverflow wrote: post #52

Earlier quoted context omitted.

That answer doesn't make any sense. Bitfinex is buying bitcoins from itself? Could you please explain in more detail?

Bitfinex isn't buying Bitcoin from itself. It is buying from customers that use their exchange, using fake money that they are printing out of thin air.

And why are the customers buying USDTs in such large volumes?

Technically all cryptocurrencies are "fake money printed out of thin air", so that doesn't bother me. I just don't get the appeal of holding USDT.

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

#83

Post by physguy1123 »

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…

Prices can move without filled orders no problem as orders get cancelled. If market makers start pulling out, the order book can become extremely thin. For the passive traders that stay in they'll probably react much more strongly to trades on the book, so even if some liquidation makes it through much won't.

Look at the GDAX ethereum crash for a recent real-live crypto example.

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

#84

Post by [deleted] »

zone411 wrote: post #58
readhn wrote: post #24

Earlier quoted context omitted.

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…

100% correct. It's painful to see how little otherwise intelligent tech people know about investing...

[deleted]

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

#86

Post by empath75 »

bduerst wrote: post #80
jonknee wrote: post #64

Earlier quoted context omitted.

People get upset when you print USD, so Bitfinex instead creates USDT out of thin air and then uses it to buy BTC on its exchange. This would be OK if the Tether was actually backed by USD reserves dollar for dollar, but there is zero evidence that this is the case.

How have they not been sued for this yet? They're advertising monopoly money as being backed by real money.

They actually say on the website that they're not redeemable.

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

#87

Post by qubex »

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 upvoted you even though I disagree with your final statement since I saw you were being thrashed down. Hope this comment doesn't get buried because “does some weird stuff” is a pretty perfect summary of the borderline-criminal behaviour of that particular exchange.

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

#88

Post by yeahsure »

kypro wrote: post #59
cgmg wrote: post #40

Earlier quoted context omitted.

That's not how it works.

What do you disagree with?

When was the last time gold was traded for < $10? Not everything that goes up is surely to go down. At least not in a lifetime. Nobody really knows what's going to happen, that's market 101.

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

#90

Post by ufo »

bufferoverflow wrote: post #82
ufo wrote: post #76

Earlier quoted context omitted.

Bitfinex isn't buying Bitcoin from itself. It is buying from customers that use their exchange, using fake money that they are printing out of thin air.

And why are the customers buying USDTs in such large volumes? Technically all cryptocurrencies are "fake money printed out of thin air", so that doesn't bother me. I just don't get the appeal of holding USDT.

> And why are the customers buying USDTs in such large volumes?

Tethers purchasing is currently unavailable for general consumers[1]. The only way for new customers to trade in Bitfinex is to purchase cryptocoins elsewhere and then transfer them to Bitfinex.

Bitfinex claims that there are unnamed "institutional investors" that are purchasing all those tethers [2]. I find that hard to believe. Most likely, the vast majority of tethers in circulation are printed out of thin air and haven't been purchased by anyone.

> Technically all cryptocurrencies are "fake money printed out of thin air"

Assuming a perfectly competitive environment, the bitcoin mining rewards should converge to the cost of mining, which leaves a smaller profit. On the other hand, Tethers are unilaterally printed by Bitfinex, with no mining cost. All the printed tethers go straight towards purchasing Bitcoin and defrauding Bitfinex customers.

> I just don't get the appeal of holding USDT.

Bitfinex attracts speculators because they allow leveraged trading (including shorting), trade lots of different cryptocurrencies in addition to Bitcoin and have lax know your customer / anti-money-laundering requirements. But I agree with you -- I am baffled why any sane person would want to come anywhere near Bitfinex.

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[1] https://wallet.tether.to/app/#!/signup

[2] https://medium.com/@bitfinexed/https://medium.com/@bitfinexe...

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