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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
#42How can you buy those futures as a regular joe? CBOE seems to be aimed at certified traders
Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker
#43I 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…
Liquidity I assume. It may be difficult to sell $25,000 worth of Bitcoin at the settlement price on the settlement date. Slippage could be more than the $2,000 profit you estimated. Especially if many people do the same trade.
Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker
#44I 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…
(I am not a professional investor)
Why is there a gap of 11% between the CBOE Future contract price and the BTC Spot price? Should they not be closer in a perfect market? Maybe the gap will be the same on the contract expiry date?
Is this because the arbitragers still need to integrate the CBOE Futures into their system?
Even between bitcoin exchanges, the bitcoin price varies. $17240 on cex and $16310 on bitstamp.
Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker
#45How can you buy those futures as a regular joe? CBOE seems to be aimed at certified traders
You can't, on purpose.
The idea is that there are two kinds of investors: Sophisticated ones who can look out for themselves, and regular joes, who are protected against being ripped off by extra regulations and extra paperwork. Bitcoin futures aren't the kind of product for which anyone will go though those regulations and do that paperwork.
Now, how do you become a sophisticated investor? First of all, have a spare million or tow. Next, fill out a quite simple form.
Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker
#46It'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.
Actually, Lightning Network will significantly increase Bitcoin's transactions per second and reduce transaction cost.
Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker
#47It'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.
I think they (or some of them) are jumping on top of it because now they've got an abstracted (and regulated) market product, something that should come with a lot less risk and with interactions with the existing stock market systems. They don't care about bitcoin, they care about the futures market, speculating with virtual products (= futures) on virtual products (which used to be physical ones like oil and tulips and whatnot).
Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker
#48So what happens when the entire earth's energy production is required to produce the next bitcoin and there is therefore no further bitcoin mining?
Lightning Network significantly reduces transaction revenue, so there will be dramatically fewer miners.
Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker
#49How can you buy those futures as a regular joe? CBOE seems to be aimed at certified traders
You can't, on purpose. The idea is that there are two kinds of investors: Sophisticated ones who can look out for themselves, and regular joes, who are protected against being ripped off by extra regulations and extra paperwork. Bitcoin futures aren't the kind of product for which anyone will go though those regulations and do that paperwork. Now, how do you become a sophisticated investor? First of all, have a spare…
I can imagine bitcoin will one day become tightly regulated and only available to sophisticated traders; the network only supports 15 transactions per second, limiting who can do trades is one way to deal with it. NYSE can do about 11K a second (based on https://www.quora.com/What-is-the-average-total-number-of-tr...)
Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker
#50Earlier quoted context omitted.
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 speculat…
I'd argue that some investors - the angel / startup investors - are gamblers, they place their bets on 100 startups and bet that one of them will be the next Facebook and eventually either sell for billions, or go to the stock market itself to get billions.
The more traditional investor gets a stake in a company and due to that stake gets a say in the running of the company, thus having an influence on its future and growth (or decline). Less of a gamble there, it becomes part of their own responsibility then.