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

[TERA2]

Bearstamp still thinks bitcoin is dying. $650 behind finex

[shmadz]

NICE! they are just halting trading momentarily as the price hits certain limits...



still not sure what they're gonna do over the weekend, but for now it seems like it's "game on!"

[fabiorem]

<snip>

But the price can change by 20% in one day. Hell, in one hour. Or minute even. So what's the deal here? They haven't done their research, or they are trying to force bitcoin to conform to their fiat norms, or what?

yeah, they have no idea what they're dealing with. They are being pressured by their clients that want exposure to the price, but they can't cover losing bets when the price moves further than their margin limits can cover.

I'm sure there is enough demand from the customers to continue futures trading, but they will need to re-think their approach: just imagine - they broke their limit in about 4.5 hours... just imagine what might happen when they close shop for the weekend?

It is said they are going to use arbitrage. They will buy and sell from a real exchange and send it to futures.

This video gives some explanation: https://www.youtube.com/watch?v=vGnH-Od1lJM

[HairyMaclairy]

We gonna bust the 20% limit today?  Second trading halt. 

Wonder if the shorts are being margin called already.

[arklan]

Looking at the 24 bitstamp chart, god damn that's a hell of a step rise. Way over 45 degrees...

My God, we have no reason to expect it to stop climbing for thousands of dollars, minus corrections, do we? It could just... Go...

[marcus_of_augustus]

Hahaha, this is classic ... Wall St. comes to bitcoin and gets limit-up #r3kt on the first day, it's like these guys are an amateur hour shitshow!

And Thar She Blows!!!!!!!!

[shmadz]

<snip>

But the price can change by 20% in one day. Hell, in one hour. Or minute even. So what's the deal here? They haven't done their research, or they are trying to force bitcoin to conform to their fiat norms, or what?

yeah, they have no idea what they're dealing with. They are being pressured by their clients that want exposure to the price, but they can't cover losing bets when the price moves further than their margin limits can cover.

I'm sure there is enough demand from the customers to continue futures trading, but they will need to re-think their approach: just imagine - they broke their limit in about 4.5 hours... just imagine what might happen when they close shop for the weekend?

It is said they are going to use arbitrage. They will buy and sell from a real exchange and send it to futures.

This video gives some explanation: https://www.youtube.com/watch?v=vGnH-Od1lJM

OK, first of all, don't listen to those two guys in the video. they have no clue, you will get REKT

Second, how are you going to "send it to futures" when the futures don't trade over the weekend?

Third, oh, nevermind, you are going to be REKT no matter what I say.

Best of luck trading

*edit* I immediately feel sorry for posting this. I would delete it but that would be cowardly and dishonest. I'm sorry for the hurtful words. I sincerely wish you all the best.

[cableiso]

Soon the bots will come online and arb all the exchanges to the futures price.  It may be a wild couple days but things will certainly settle soon.

18.3K is looking good though, thanks China!

[TERA2]

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

[fabiorem]

<snip>

But the price can change by 20% in one day. Hell, in one hour. Or minute even. So what's the deal here? They haven't done their research, or they are trying to force bitcoin to conform to their fiat norms, or what?

yeah, they have no idea what they're dealing with. They are being pressured by their clients that want exposure to the price, but they can't cover losing bets when the price moves further than their margin limits can cover.

I'm sure there is enough demand from the customers to continue futures trading, but they will need to re-think their approach: just imagine - they broke their limit in about 4.5 hours... just imagine what might happen when they close shop for the weekend?

It is said they are going to use arbitrage. They will buy and sell from a real exchange and send it to futures.

This video gives some explanation: https://www.youtube.com/watch?v=vGnH-Od1lJM

OK, first of all, don't listen to those two guys in the video. they have no clue, you will get REKT

Second, how are you going to "send it to futures" when the futures don't trade over the weekend?

Third, oh, nevermind, you are going to be REKT no matter what I say.

Best of luck trading

Im not going to trade in futures.

[Rosewater Foundation]

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

[arklan]

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

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

[shmadz]

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.750

*edit* looks like futures are over 18000 while bitstamp is still around 15750 - not sure which one will follow the other at this point?

[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?

[shmadz]

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.

Typically the brokerage that facilitates the trade will settle prior to the delivery date. http://futures.tradingcharts.com/tafm/tafm10.html

The whole point of futures was supposed to be delivery of a certain commodity at a certain date for a certain price.

Of course, as with everything else, the point has been lost over time...

[cableiso]

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.

[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.

Typically the brokerage that facilitates the trade will settle prior to the delivery date. http://futures.tradingcharts.com/tafm/tafm10.html

The whole point of futures was supposed to be delivery of a certain commodity at a certain date for a certain price.

Of course, as with everything else, the point has been lost over time...

Yeah, but getting into the logistics of delivery of assorted assets would be too complex for the exchange. So now, imagine you are a big soya distributor so you really need the soya for your business. You can still use the future markets to hedge/fix a price in advance. If soya prices are higher when you need to buy it, you get the profit of the future contracts you have at a lower price and use the extra profit to buy the soya.

Basically it works the same.

[Gab0]

In a bitcoin market analysis of CME Group, they relate the bitcoin collapses to the excessive increase in transaction costs.

Transaction costs spiked from $2 to around $30 per transaction in late 2010 just before bitcoin prices suffered a 93% collapse.  As bitcoin transaction costs subsequently fell, another bull market developed.  Transaction costs edged higher in 2012 and then soared to over $80 by early 2013, which coincided with another collapse in bitcoin prices. By 2015, transaction costs eased toward $8 when another bull market began. Starting in late 2016, they began to rise again and are now nearing $60-$70 per transaction (Figure 6).  Will this limit demand growth and provoke another bitcoin crash? If so, to what level will transaction cost have to rise in order to provoke such a correction?

While we don’t know the answers to these questions, we can make the following observations:
In 2010, bitcoin prices were around $30 and the cost of transaction rose to $30.
In 2013, bitcoin prices rose to around $1,000 and transaction costs got to $80.

With the price of bitcoin now around $10,000 as of this writing, could the market sustain transaction costs of $80, $100 or more without demand and prices collapsing?

Source: http://www.cmegroup.com/education/featured-reports/bitcoin-will-stunning-rally-sustain-or-sour-in-2018.html


What do you think? Could we see $ 80 or even $ 100 in fees? Would they be related to a possible collapse and end of this bull market?

Edit: Thinking well ... is it possible? according to that table the transaction costs have been higher than the price in 2010.

[cableiso]

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.

[shmadz]

Yeah, but getting into the logistics of delivery of assorted assets would be too complex for the exchange. So now, imagine you are a big soya distributor so you really need the soya for your business. You can still use the future markets to hedge/fix a price in advance. If soya prices are higher when you need to buy it, you get the profit of the future contracts you have at a lower price and use the extra profit to buy the soya.

Basically it works the same.

I'll quote the link that you may have declined to read or simply misunderstood.

You may wonder what happens if a trader forgets to close out a long position. If he bought live hog futures, will someone deliver 40,000 pounds worth of squealing porkers to his back door the morning after his contract expires?

Sorry, but no.

Brokerage firms watch their open accounts and know who has long or short positions in contracts nearing maturity. Prior to delivery day, they inform customers who have open long positions that they must either close out the position or prepare to take delivery and pay the full value of the underlying contract. By the same token traders with short positions are informed that they must close out their trades or prepare to deliver the underlying commodity. In this case, they must have the required quantity and quality of the deliverable commodity on hand.

On the few occasions that a buyer accepts delivery against his futures contract, he is usually not given the underlying commodity itself (except in the case of financials), but rather a receipt entitling him to fetch the hogs, wheat, or corn from warehouses or distribution points.

Food processors or manufacturers who use futures to hedge rarely take delivery because the deliverable grade on the contract may not be exactly what they need. Hence, they will close out their futures position before delivery and buy in the cash market instead.

Sometimes merchants and dealers accept delivery because they can find buyers for many grades and types of the underlying commodity.

hope that clears things up.