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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

#311

Post by heptathorp »

brendanw wrote: post #309

BTC Trading volume over the last 24hrs is $6,795,970,000 ( https://coinmarketcap.com/currencies/bitcoin/#markets ) Tether trading volume over the last 24hrs is $803,868,000 ( https://coinmarketcap.com/currencies/tether/#markets ) At most tether can make up 11.8% of BTC's daily trading volume. If tether tanks, then it seems that worst-case BTC could suffer a 10% drop in demand, ceteris paribus. Please tell me if there…

It could be misleading to look at volume. For example how much of that $6.8B is due to wash trading? Also Bitcoin is paired with literally hundreds of altcoins, which make up a portion of that volume. We would want to focus on how much BTC is purchased with USD vs how much is purchased with USDT.

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

#312

Post by hossbeast »

exelius wrote: post #273
darawk wrote: post #123

Earlier quoted context omitted.

There's no reason arbitrage should push up the price of Bitcoin. Tether exists to normalize arb opportunities between exchanges. That's what it was created for. There is indeed a real question as to whether or not Bitfinex has issued more Tether than it has in reserve, or whether or not they will actually pay people out for their Tether tokens. But there is no 'arbitrage feedback loop' driving the price rise.

It only works that way if you trust Tether and the exchanges. Given how shadowy the big ones are, I'm not sure that's a good idea. It appears this kind of arbitrage is designed to push up the price of BTC -- as long as the price keeps going up, people aren't going to withdraw. Once we start to see a sell-off though, the exchanges will stop being able to pay in USD pretty quickly. My thought is that every time Tether/…

If you don't mind my asking, how long had you held for?

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

#313

Post by komali2 »

magpi3 wrote: post #303
komali2 wrote: post #270

Earlier quoted context omitted.

Why are markets inherently "smart?" And why is a crash not the market being "wrong?" What even is the market ? If it's the people in it, and they're smart, why did they buy subprime loan investment instruments and nuke the housing market and lose all their money?

> What even is the market? A democracy where people vote with their money. Since their is significant risk involved, said people are assumed to do at least some due diligence/research before placing their "votes." And for that reason people have confidence that markets are right/smart, because why would so many intelligent people put themselves at enormous risk by placing their confidence in a bad investment? Of cour…

Is it really the mindset in the current decade that those that "vote with their money" put any more consideration into their decisions than those that "vote with their vote?" AKA very little whatsoever?

I only ask because most of what I've been reading has assumed the market is irrational.

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

#314

Post by kharms »

panarky wrote: post #235
jayd16 wrote: post #203

Earlier quoted context omitted.

I'm no expert but mulling it over.... If Tether is big enough that the price of BTC is effected by it, such that investors feel they can cash out and that is part of their risk calculation, then a tank in Tether would also cause a drop in BTC. If Tether is backed by loans and not hard cold cash that's a risk and effects the value. If someone is able to buy Tether on credit, and the credit is actually backed by BTC th…

If traders lose faith in Tether, they would sell Tether and buy Bitcoin in a flight to safety. Bitcoin prices would rise as traders try to get out of Tether. Conceivably, a crisis with Tether could affect confidence in the entire cryptocurrency ecosystem, which would put downward pressure on the Bitcoin exchange rate. It's not clear which of these factors would dominate, so it's not clear what would happen to exchang…

>If traders lose faith in Tether, they would sell Tether and buy Bitcoin in a flight to safety. Bitcoin prices would rise as traders try to get out of Tether.

The Tether:Bitcoin rate would rise, but I’m not sure that the Bitcoin:USD price would follow suit.

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

#315

Post by bcoates »

jpmattia wrote: post #264
bcoates wrote: post #174

Earlier quoted context omitted.

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…

> Tether is how you short bitcoin ... so they move into tether hoping to buy back in after bitcoin goes down without having to do the expensive/difficult bitcoin-usd move. "Shorting" means borrowing bitcoin and then selling the borrowed bitcoin. What you've described is simply selling bitcoin for USDT, unless I'm missing something.

It's short in the sense that you're selling before you buy and profiting off the thing bought/sold (bitcoin) going down between the two trades. Sell -> wait -> buy as opposed to the 'long' position of buy -> wait -> sell.

Since nobody-ish lets you borrow for bitcoin margin trades you have to "borrow from yourself" (already own bitcoin) and be long-bitcoin in the long run for that to make any sense.

But if you're a to-the-moon true believer that also thinks that bitcoin is in a bubble and going to make a temporary correction you could make a ton of bitcoin by being right... if you can actually make the trades and not get screwed by a counterparty.

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

#316

Post by paulie_a »

aaavl2821 wrote: post #220
busterc wrote: post #117

I found this comment, by Richard Berger on SeekingAlpha, compelling: > STOP! and think about what this author has revealed. Even IF Tether is NOT running a fraud, the arbitrage positions that automatically exist between Bitcoin and any tether are real and do create incentive to create an arbitraged feedback loop whereby a pegged tether between Bitcoin - any_generic_tether - USD does exist and self feeds, driving up B…

can you explain this like you would to a five year old?

I really hope this was an intentional quote from the movie Margin call

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

#317

Post by s17n »

panarky wrote: post #274
s17n wrote: post #259

Earlier quoted context omitted.

Actually, housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt. I don't think there's a similar scenario with bitcoin. On the other hand, a large secular demand will always exist for housing. The same is not true for bitcoin.

> Actually, housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt. For completeness, "housing crashed when lots of people who had bought housing on credit turned out to be unable to service the debt and couldn't sell to someone else for more than they paid " That italicized part is what caused the downward spiral, and that's the part that's relevant to Tether…

A "bubble" doesn't require the participation of all or even most market participants. As long as prices are being driven by short-term speculation, it's a bubble.

I think that bitcoin prices are being primarily driven by long-term speculation - if everybody hoping to flip BTC for overnight profit exited the market tomorrow, it wouldn't make that much a difference in the end. Wouldn't surprise me if I am wrong though.

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

#318

Post by exelius »

hossbeast wrote: post #312
exelius wrote: post #273

Earlier quoted context omitted.

It only works that way if you trust Tether and the exchanges. Given how shadowy the big ones are, I'm not sure that's a good idea. It appears this kind of arbitrage is designed to push up the price of BTC -- as long as the price keeps going up, people aren't going to withdraw. Once we start to see a sell-off though, the exchanges will stop being able to pay in USD pretty quickly. My thought is that every time Tether/…

If you don't mind my asking, how long had you held for?

About 4.5 years? Bought some on Coinbase when I saw them at SXSW a few years back then promptly forgot about it. Pretty sure I'm gonna be one of the few "casuals" who manages to take any money away from BTC when this is all said and done...

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

#319

Post by wolco »

saalweachter wrote: post #258
adameast9000 wrote: post #182

Earlier quoted context omitted.

Unfortunately fractional reserve isn't safe for a currency that is this volatile. Depending on what the "fraction" is, some major withdrawal demand against one of these exchanges would topple it

So you are a Big Fish. You have a boatload of money in exchange X. You go to take it out and they don't immediately give it to you. They say, "Listen, we can't get to it, it's in our cold wallets, it will take a week." A week goes by, they say, "Listen, here's 10% of what you asked for, we'll get you the rest shortly.". This goes on, they periodically give you some of the money but there's a lot of evasion. What's th…

Move coins to another exchange

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

#320

Post by empath75 »

wolco wrote: post #319
saalweachter wrote: post #258

Earlier quoted context omitted.

So you are a Big Fish. You have a boatload of money in exchange X. You go to take it out and they don't immediately give it to you. They say, "Listen, we can't get to it, it's in our cold wallets, it will take a week." A week goes by, they say, "Listen, here's 10% of what you asked for, we'll get you the rest shortly.". This goes on, they periodically give you some of the money but there's a lot of evasion. What's th…

Move coins to another exchange

How? They have your coins.
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