Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[bitserve]

This thing is totally unhinged from the underlying asset. Is that how Wall St. do?

Seems like... Maybe it'll level out in time?

I would like to see a futures market that enforced delivery. that would actually have some use for miners and others that are trying to hedge risk.

This seems like a pure derivative market adding risk instead of mitigating it...

I suppose time will tell.

They are not used to "delivery". Who in their right senses would want a fucking BUNCH of soya being delivered to them? What about logistics?

Even gold is cumbersome enough.

They are not used to an asset as easily deliverable as Bitcoin is.

And yes, futures are derivatives, no?

A manufacturer of soya products would want delivery in 6mo at today's price because it removes price variance risk from their accounting.

That's what futures are for, actual manufacturers.  Speculation is just added fun.

Yes, you are right. I covered that issue on my last post above. You can remove price variance risk with NON-deliverable futures too... and that's exactly what they are doing.

[yefi]

anyways, my point is, everyone thinks bitcoin is a scam the first time they hear about it. it isn't until you really spend some time to look into it that you realize what it really is...

I think my first response was awe and curiosity, not suspicion. And I don't know how it was for others, but that first week was like I just got unhooked from the Matrix.

[mymenace]

anyways, my point is, everyone thinks bitcoin is a scam the first time they hear about it. it isn't until you really spend some time to look into it that you realize what it really is...

I think my first response was awe and curiosity, not suspicion. And I don't know how it was for others, but that first week was like I just got unhooked from the Matrix.

yep same here

[d_eddie]

Right now the Jan futures have 1.6K of volume. Why would the price be arbed there? Weve never arbed to GBTC either.

Gbtc is not a contract that you can deliver on.  Buy 5btc from an exchange at 16K and sell a cboe contract at 18K.  You made 10K.  If price falls, buy cheaper btc and deliver those to the contract.  If price rises above 18K, well - your gain is fixed at 10K but people do a lot more work for less money.

This will push all exchange prices to track the futures price.  If there is a discrepancy in the cost of the real market vs the futures market, bots will arb it out.

But what if the futures market doesn't have enough liquidity?
Or if it has clamped variation?
I think any arbitrage plan can break down due to these extra factors.

[TERA2]

Right now the Jan futures have 1.6K of volume. Why would the price be arbed there? Weve never arbed to GBTC either.

Gbtc is not a contract that you can deliver on.  Buy 5btc from an exchange at 16K and sell a cboe contract at 18K.  You made 10K.  If price falls, buy cheaper btc and deliver those to the contract.  If price rises above 18K, well - your gain is fixed at 10K but people do a lot more work for less money.

This will push all exchange prices to track the futures price.  If there is a discrepancy in the cost of the real market vs the futures market, bots will arb it out.

CBOE futures are not delivered on either. They are cash settled.

[bitserve]

hope that clears things up.

Yes they could do that. I don't know if it is only in the case of BTC they are not doing it or if CBOE does the same to other commodities such as gold/soya/etc.

[TERA2]

Futures don't move the Bitcoin, Bitcoin moves the future.

[Rosewater Foundation]

And no one has any money left on Stamp to take advantage of a $400 arb. This is some bizarro shit.

[TERA2]

In 2013 there were 15% arbs all the time between btce and gox

[Rosewater Foundation]

In 2013 there were 15% arbs all the time between btce and gox

I thought we were more sophisticated now.

[shmadz]

anyways, my point is, everyone thinks bitcoin is a scam the first time they hear about it. it isn't until you really spend some time to look into it that you realize what it really is...

I think my first response was awe and curiosity, not suspicion. And I don't know how it was for others, but that first week was like I just got unhooked from the Matrix.

yep same here

OK, OK, you old-timers... maybe it's just me, but I figured it was too good to be true and it took me a long while before I finally figured it out.

[mymenace]

anyways, my point is, everyone thinks bitcoin is a scam the first time they hear about it. it isn't until you really spend some time to look into it that you realize what it really is...

I think my first response was awe and curiosity, not suspicion. And I don't know how it was for others, but that first week was like I just got unhooked from the Matrix.

yep same here

OK, OK, you old-timers... maybe it's just me, but I figured it was too good to be true and it took me a long while before I finally figured it out.

biggest red pill ever when it hits you, the simple yet robust code is enough to deliver a complete transparent peer to peer digital transaction service that exposes the financial system for what it is ...one big ponzi scheme...

[jojo69]

Personally, I came from a PM background so had a healthy hatred of that fiat trash already.  I also had recently read Neal Stephenson's Baroque Cycle, a monumental work of historical fiction that deals with the nature of money and cryptrography that I would strongly recommend hodlers to read.  So my response to discovering Bitcoin was more like "OMFG... ... ...an IMPLEMENTATION!!!"

[HairyMaclairy]

I think the model is broken.  And it is going to drive the price of bitcoin sky high.

The reason is the only way retail and institutional investors can get exposure to Bitcoin is through futures. So futures are being used as a substitute for an ETF.  Which is going to blow the price of futures sky high as people FOMO.  

Which means a roaring arbitrage trade will develop with the exchanges. But the cost of funds of being a shorter will spiral out of control due to constant margin calls on the shorts who will have to pour in more fiat. Which will restrict supply, driving the cost higher.   So we should expect an ever increasing divergence between the future price and the exchange price.

[mymenace]

Personally, I came from a PM background so had a healthy hatred of that fiat trash already.  I also had recently read Neal Stephenson's Baroque Cycle, a monumental work of historical fiction that deals with the nature of money and cryptrography that I would strongly recommend hodlers to read.  So my response to discovering Bitcoin was more like "OMFG... ... ...an IMPLEMENTATION!!!"

If I understand his stories are based partly on isaac newtown work with the treasury

http://www.royalmintmuseum.org.uk/history/people/mint-officials/isaac-newton/index2.html

Rothschild's love Isaac
http://www.newton.ac.uk/fellowships/rothschild


and once you take the pill the rabbit hole goes deeper


https://en.wikipedia.org/wiki/Isaac_Newton%27s_occult_studies


Isaac newton the investor
https://www.cryptocoinsnews.com/bitcoin-investors-can-learn-issac-newtons-mistake/


amazing what you can find in 10 minutes

[shmadz]

I think the model is broken.  And it is going to drive the price of bitcoin sky high.

The reason is the only way retail and institutional investors can get exposure to Bitcoin is through futures. So futures are being used as a substitute for an ETF.  Which is going to blow the price of futures sky high as people FOMO.  

Which means a roaring arbitrage trade will develop with the exchanges. But the cost of funds of being a shorter will spiral out of control due to constant margin calls on the shorts who will have to pour in more fiat. Which will restrict supply, driving the cost higher.   So we should expect an ever increasing divergence between the future price and the exchange price.

Every long trade needs a short counterparty. I agree this will incentivize arbitrage, but as long as the available price of the underlying is less than the price of the active futures, then there should be someone willing and able to fill that gap.

I think?

[TERA2]

Does anyone know what the market cap of tulips was? I cant find it and all I see is articles about bitcoin.

[HairyMaclairy]

I think the model is broken.  And it is going to drive the price of bitcoin sky high.

The reason is the only way retail and institutional investors can get exposure to Bitcoin is through futures. So futures are being used as a substitute for an ETF.  Which is going to blow the price of futures sky high as people FOMO.  

Which means a roaring arbitrage trade will develop with the exchanges. But the cost of funds of being a shorter will spiral out of control due to constant margin calls on the shorts who will have to pour in more fiat. Which will restrict supply, driving the cost higher.   So we should expect an ever increasing divergence between the future price and the exchange price.

Every long trade needs a short counterparty. I agree this will incentivize arbitrage, but as long as the available price of the underlying is less than the price of the active futures, then there should be someone willing and able to fill that gap.

I think?

But if you are short, and the price goes up, you will have to keep topping up your margin.  Are you prepared to top up a $16k short with $20k margin?   Just trying to figure this out.

[shmadz]

I think the model is broken.  And it is going to drive the price of bitcoin sky high.

The reason is the only way retail and institutional investors can get exposure to Bitcoin is through futures. So futures are being used as a substitute for an ETF.  Which is going to blow the price of futures sky high as people FOMO.  

Which means a roaring arbitrage trade will develop with the exchanges. But the cost of funds of being a shorter will spiral out of control due to constant margin calls on the shorts who will have to pour in more fiat. Which will restrict supply, driving the cost higher.   So we should expect an ever increasing divergence between the future price and the exchange price.

Every long trade needs a short counterparty. I agree this will incentivize arbitrage, but as long as the available price of the underlying is less than the price of the active futures, then there should be someone willing and able to fill that gap.

I think?

But if you are short, and the price goes up, you will have to keep topping up your margin.  Are you prepared to top up a $16k short with $20k margin?   Just trying to figure this out.

there is no limit to fiat money.

I think the people on the short side will either cut their losses or just pile money into their position hoping for a retracement before the end of the contract. the higher the price goes, the more people will be willing to take that risk and the cheaper those contracts that are so far out of the money become. I believe Nassim Taleb made his fortune betting on this same kind of "out of the money" type bet.

[marcus_of_augustus]

Does anyone know what the market cap of tulips was? I cant find it and all I see is articles about bitcoin.

Actually the largest part of the tulip-mania was mostly in tulip futures markets.

Derivatives were a new financial 'innovation' then and the ability for tulip farmers to hedge their purchases of bulbs at planting time, in order to produce the rarest, most precious varieties, out into the harvest season was considered a huge boon for them. Of course, some greedy financial speculators got involved and the mania spiralled quickly out of control. At it's height, tulip investing clubs were being formed because it was too expensive for even one wealthy individual to own one tulip future individually, they packaged the futures into bundles and sliced and diced them up so you could invest in a diversity of tulip varieties and colours. At one point, it was said people were selling their modern townhouses in the heart of Amsterdam in order to buy only a share in a tulip future investment club.

The crash was so swift that the rarest and quirkiest tulips that had been heavily over-invested in were in abundance at their time of harvest, but anyone that owned them by now was probably already ruined by the crash in the futures market not long after the planting season.

You know it sounds exactly like the housing market mortgage debt investment bubble after the banks got involved .... hmmm.