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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

#51

Post by Cthulhu_ »

sametmax wrote: post #28
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?

Bitcoin is limited at 21 million coins. After that, no more btc, and people will trade in btc divisions such as satoshis. But there are hundrerds of bitcoin alternatives now, some very interesting.

If there's no more miners / mining, who verifies the transactions? (iirc that's what miners did, but correct me if I'm wrong and miners only generate currency and don't verify transactions)

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

#52

Post by lug0r »

LrnByTeach wrote: post #40

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…

> if the bitcoin is keep rising in price , trader needs to supply more money to meet the margin call

This can get quite expensive.

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

#53

Post by Cthulhu_ »

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?

Existing bitcoin stock will just split into smaller parts (= the BTC price goes up further and trading happens in smaller fractions).

If the network however becomes so bogged down that transactions take weeks, I'm fairly sure people will gravitate towards some of the other currencies; hopefully this is a gradual process, and the BTC price won't be affected too much / too directly.

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

#54

Post by LrnByTeach »

andruby wrote: post #44
LrnByTeach wrote: post #40

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…

(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.

Futures contract has TIME value, so they are usually higher than the SPOT price, please check this link for detailed explanation .

https://www.investopedia.com/terms/f/futurescontract.asp

Thought it is not exactly same, but similar case is Where you pay Premium with Stock Options to have the right RIGHT to buy the stock one month from now.

Regarding cex & bitstamp they are exchange out side of USA, each of them have different Risk factors associated to each of those exchanges, that is why that price difference .

Coinbase and CBOE are both US based exchanges and are under govt. regulation and are reputable than any other bitcoin exchanges in the world.

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

#55

Post by LrnByTeach »

lug0r wrote: post #52
LrnByTeach wrote: post #40

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…

> if the bitcoin is keep rising in price , trader needs to supply more money to meet the margin call This can get quite expensive.

additional $10,000 margin call is well with in the profit margin (on the money interest rate basis), unless bitcoin goes to $100,000 by next month.

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

#56

Post by sah2ed »

esarbe wrote: post #39
sametmax wrote: post #25

Earlier 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…

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

Based on your definition, what would you call Carl Icahn then?

I tend to agree with John Bogle's definition that both types of people are in it for the money, the only fundamental difference is the time horizon either is willing to wait to reap the returns from their investment.

[0] https://en.wikipedia.org/wiki/John_C._Bogle#Investment_philo...:

The main difference between investment and speculation lies in the time horizon. Investment is concerned with capturing returns on the long-run with lower risk, while speculation is concerned with achieving returns over a short period of time. Bogle believes this is an important analysis to be taken into account as short-term, risky investments have been flooding the financial markets.

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

#57

Post by gibybo »

Arnt wrote: post #45
beberlei wrote: post #42

How 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…

Interactive Brokers is providing access to the CBOE futures to retail investors. Appears to be long positions only at the moment with high margin requirements, but it's something.

Many of the other large retail brokerages said they would offer them pending liquidity/volume thresholds.

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

#58

Post by delhanty »

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...

Randy Mitterling, Nassim Taleb, Chris Cook appear to agree with you. [1]

So maybe that's the way it is - Bitcoin futures the biggest crypto ponzi scheme yet?

[1] https://twitter.com/nntaleb/status/939852491130396673

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

#59

Post by endless1234 »

Cthulhu_ wrote: post #51
sametmax wrote: post #28

Earlier quoted context omitted.

Bitcoin is limited at 21 million coins. After that, no more btc, and people will trade in btc divisions such as satoshis. But there are hundrerds of bitcoin alternatives now, some very interesting.

If there's no more miners / mining, who verifies the transactions? (iirc that's what miners did, but correct me if I'm wrong and miners only generate currency and don't verify transactions)

They do verify transactions, and are incentivized to do so by transaction fees

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

#60

Post by jamiegreen »

Cthulhu_ wrote: post #51
sametmax wrote: post #28

Earlier quoted context omitted.

Bitcoin is limited at 21 million coins. After that, no more btc, and people will trade in btc divisions such as satoshis. But there are hundrerds of bitcoin alternatives now, some very interesting.

If there's no more miners / mining, who verifies the transactions? (iirc that's what miners did, but correct me if I'm wrong and miners only generate currency and don't verify transactions)

As far as I understand, the process of mining is verifying the transactions as well. The miners are generating bitcoin as part of the process of verifying the transactions. After the 21 mil limit is hit, they will be rewarded from the transaction fees. (Someone with more in depth knowledge feel free to correct me if I am wrong).
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