Why i think the CME listing Bitcoin Futures is actually a bad thing!

[PrymeTyme]

most comments i read and heard after CME announced that they will list  Bitcoin Futures in Q4 2017 ..
where the sorts of  MOON! wallstreet flood gates about to open!, etc..


for me personally that news left a  sort of bad aftertaste...



here is why

it is now very invietable that the bitcoin markets "spot" and futures will be heavily manipulated which may lead to a nosedive
(after a prolonged upmove) which we havent seen in a long time affecting average joe  , mom and pop etc.. , and the outcry for a regulation
of the bitcoin markets will be huge , which will be bad for btc in the longterm.. and may verywell be the first nail in the coffin...

just some examples which you can see and mirror easily on the bitcoin markets

Strategic Trading and Manipulation with Spot Market Power

Abstract

When a spot market monopolist holds a position in the corresponding futures market, he has an
incentive to deviate from the spot market optimum to make this position more proftable. Rational
futures market makers take this into account when setting prices. We show that the monopolist, by
randomizing his futures market position, can strategically exploit his market power at the expense of
other futures market participants. Furthermore, traders without market power can manipulate futures
prices because their trades can strategically reveal to market makers similar trades by the monopolist.
The moral hazard problem stemming from spot market power thus provides a venue for strategic trading
and manipulation that parallels the adverse selection problem stemming from inside information.

https://www.wu.ac.at/fileadmin/wu/d/i/finance/wissenschaftlMitarbeiter/M%C3%BCrmann_Alexander/Bilder-Dateien/muermannshore.pdf

Detecting price artificiality and manipulation in futures markets: An application to Amaranth

Abstract

In this article we propose a general method to test whether economic data support the claim of futures market manipulation.
We examine the question of whether or not Amaranth manipulated the market for natural gas futures using three alternative methods.
The first is our contribution to the existing body of literature on the analysis of manipulation claims.
The subsequent two have previously been discussed in the literature. All three methods yield the same result: economic data
on futures prices and Amaranth's trades do not support the claim that Amaranth manipulated the natural gas futures market in 2006.


https://link.springer.com/article/10.1057/jdhf.2012.7


DETECTING MANIPULATION IN FUTURES MARKETS:
THE FERRUZZI SOYBEAN EPISODE

Abstract:

 Market manipulation--the exercise of market power in a futures market--is a
felony under US commodity law, but recent court and regulatory decisions have made
conviction of a manipulator problematic at best. Instead, regulators attempt to prevent
manipulation through various means. Deterrence is more efficient than prevention if
manipulations can be detected ex post with high probability. This article examines a
particular episode of attempted manipulation--the Ferruzzi soybean episode of 1989--to
demonstrate how to detect manipulation in a commodity market. The analysis
demonstrates that it is exceedingly unlikely that the price and quantity relations observed
in May and July 1989 were the result of competition; they are instead reflective of market
power. The ability to detect manipulation reliably suggests that existing regulation of
manipulation in futures and securities markets is inefficient because it relies on costly
preventative measures rather than ex post deterrence.


http://www.bauer.uh.edu/spirrong/ferrpap3.pdf


Silver Thursday: How Two Wealthy Traders Cornered The Market

http://www.investopedia.com/articles/optioninvestor/09/silver-thursday-hunt-brothers.asp

Who is Mr. Copper?

http://www.investopedia.com/ask/answers/08/mr-copper-sumitomo-hamanaka.asp

Insight From “The Flipper”: Catching up with Paul Rotter

https://seekingalpha.com/instablog/696397-traderdaily/85609-insight-from-the-flipper-catching-up-with-paul-rotter

finally , it is a bitcoin forum afterall

HOW TO MANIPULATE THE BITCOIN MARKET

http://www.bsic.it/manipulate-bitcoin-market-introduction-13/
http://www.bsic.it/manipulate-bitcoin-market-23/
http://www.bsic.it/manipulate-bitcoin-market-33/

[BitHodler]

Sooner or later this market would get taken over by institutions anyway, which in a certain way may concern some people here, but we have to accept that this is just the result of a maturing industry.

Important is the fact that we should be happy that it will allow billions of capital to flow into this industry, which most of the people here look at as being something rather positive, and rightfully so.

Will it be subject to high level of manipulation? Maybe, but there isn't much for us that we can do other than to go with how things are. Only time will tell how this market will react at the time large players are entering the market.

At the end of the day, this market has been subject to manipulation for years now, so there isn't much that will be happening that we aren't aware of, or should get surprised about. I don't see any long term drawbacks.

[RoommateAgreement]

but do you think there is no manipulation now?

in my opinion the argument should be about trying to figure out the total result of the following:
- how much more manipulation can CME listing bitcoin futures bring to the market which already has whales with so much bitcoin and money who are doing that already.
- how much bigger will bitcoin market get because of this news alone and how much that growth will make manipulating the price harder

you can't just enter a $120 billion market with $4.5 billion daily volume and think you can manipulate it greatly. specially if you are going against the market.

[Wind_FURY]

OP, the question of "when will Bitcoin start gaining real mainstream adoption" has always been around. The CME's listing is one of the roads that it should take to get there. We should be bullish about it.

I suggest you take a step back and read the developer's documentation at www.bitcoin.org, and try to gain a deeper understanding of the protocol. Once you do, then tell me, what can those bankers do to stop it? Sure, the price may fall for a while, but the network will live on.

[Pab]

but do you think there is no manipulation now?

in my opinion the argument should be about trying to figure out the total result of the following:
- how much more manipulation can CME listing bitcoin futures bring to the market which already has whales with so much bitcoin and money who are doing that already.
- how much bigger will bitcoin market get because of this news alone and how much that growth will make manipulating the price harder

you can't just enter a $120 billion market with $4.5 billion daily volume and think you can manipulate it greatly. specially if you are going against the market.

How gold price is manipulated,very easy virtual gold has nothing with real gold price,traders are not buying real gold,here traders will just buy bets with cash,dollar even a penny will not goes in to btc

[Lieldoryn]

Any expansion of opportunities for the use of bitcoin has a positive effect. Than more opportunities to use bitcoin the more it will conform to the requirements of currency. Trade always induces the production and if it will happen with bitcoin then he would leave the risk zone.

[DaMut]

indeed i have a same opinion with you,
but if we can not find something new with it,do not you think it's just the same ?
also they're saying about listing Bitcoin Futures in Q4 2017,but they did not mention about the date.
it's possible to see the false hope,should be right ? everything can be happen in cryptocurrency.
lets talk about manipulation,
even though right now many people manipulated Bitcoin price,but they did not do it too much.
what i mean is,when they're manipulating it they're keep doing a 'healthy' pullback later on.
i just hope because of their listing,people will not overhype it.because if everybody do that,the bubble is real
and we will see the bubble burst in a year later or more,there will be no more cryptocurrency aka Bitcoin in this world..

[thecodebear]

Yes likely this will start allowing the institutional investors to manipulate the market. But that was always gonna happen. I don't think futures price will affect the bitcoin market very much unless the investors start buying bitcoin to hedge their bets. And if they do that then that means a huge amount of money is gonna flow into bitcoin so the price is gonna skyrocket by tens of thousands of dollars very quickly. They might be able to manipulate the market then, but by the time we'll have all made so much money, and the global pressure on bitcoin will still be upwards even if those investors are putting downward pressure on it, since lots of new people will see the boom and be getting in on the gold rush.

Anyways, not worried about it. Think it will have a hugely positive effect on bitcoin price and therefore continued adoption.

[PrymeTyme]

futures == mom and pops and their dentist have easy access to the bitcoin world...

wich will unlock a rise in demand of more uninformed investors..

uniformed investors vs. a big players or as i stated in the Original post "Spot Market Power Holders" whereas the later are only interrested in making money.. and have a nice playing field which is unregulated and as such
will be blamed for the losses occured.. by mr smith  aka the dentist of mom and pop ,  who was just interreset in participating in the bitcoin craze.. and now sits there with  a huge loss.. who to blame ?

the bubble is not bitcoin.. but the derivative on top of it (futures).. and its easy to blame the "hacker internet nerd money" aka bitcoin which was formed in a subculture etc.. bla bla..

get it ? the mainstream adoption thru manipulative markets where the big boys aka.. financial institutions etc. are the ones who dictate .. will cause a huge mayhem upon the bitcoin world..unless you are not driven by
making profits..


tldr;:

futures open the world of easy money for the big players and later  blame bitcoin for the loss of the uniformed participants...

aka. make money and get rid of a potential threat at the same time... nice play

[Juggy777]

most comments i read and heard after CME announced that they will list  Bitcoin Futures in Q4 2017 ..
where the sorts of  MOON! wallstreet flood gates about to open!, etc..


for me personally that news left a  sort of bad aftertaste...



here is why

it is now very invietable that the bitcoin markets "spot" and futures will be heavily manipulated which may lead to a nosedive
(after a prolonged upmove) which we havent seen in a long time affecting average joe  , mom and pop etc.. , and the outcry for a regulation
of the bitcoin markets will be huge , which will be bad for btc in the longterm.. and may verywell be the first nail in the coffin...

just some examples which you can see and mirror easily on the bitcoin markets

Strategic Trading and Manipulation with Spot Market Power

Abstract

When a spot market monopolist holds a position in the corresponding futures market, he has an
incentive to deviate from the spot market optimum to make this position more proftable. Rational
futures market makers take this into account when setting prices. We show that the monopolist, by
randomizing his futures market position, can strategically exploit his market power at the expense of
other futures market participants. Furthermore, traders without market power can manipulate futures
prices because their trades can strategically reveal to market makers similar trades by the monopolist.
The moral hazard problem stemming from spot market power thus provides a venue for strategic trading
and manipulation that parallels the adverse selection problem stemming from inside information.

https://www.wu.ac.at/fileadmin/wu/d/i/finance/wissenschaftlMitarbeiter/M%C3%BCrmann_Alexander/Bilder-Dateien/muermannshore.pdf

Detecting price artificiality and manipulation in futures markets: An application to Amaranth

Abstract

In this article we propose a general method to test whether economic data support the claim of futures market manipulation.
We examine the question of whether or not Amaranth manipulated the market for natural gas futures using three alternative methods.
The first is our contribution to the existing body of literature on the analysis of manipulation claims.
The subsequent two have previously been discussed in the literature. All three methods yield the same result: economic data
on futures prices and Amaranth's trades do not support the claim that Amaranth manipulated the natural gas futures market in 2006.


https://link.springer.com/article/10.1057/jdhf.2012.7


DETECTING MANIPULATION IN FUTURES MARKETS:
THE FERRUZZI SOYBEAN EPISODE

Abstract:

 Market manipulation--the exercise of market power in a futures market--is a
felony under US commodity law, but recent court and regulatory decisions have made
conviction of a manipulator problematic at best. Instead, regulators attempt to prevent
manipulation through various means. Deterrence is more efficient than prevention if
manipulations can be detected ex post with high probability. This article examines a
particular episode of attempted manipulation--the Ferruzzi soybean episode of 1989--to
demonstrate how to detect manipulation in a commodity market. The analysis
demonstrates that it is exceedingly unlikely that the price and quantity relations observed
in May and July 1989 were the result of competition; they are instead reflective of market
power. The ability to detect manipulation reliably suggests that existing regulation of
manipulation in futures and securities markets is inefficient because it relies on costly
preventative measures rather than ex post deterrence.


http://www.bauer.uh.edu/spirrong/ferrpap3.pdf


Silver Thursday: How Two Wealthy Traders Cornered The Market

http://www.investopedia.com/articles/optioninvestor/09/silver-thursday-hunt-brothers.asp

Who is Mr. Copper?

http://www.investopedia.com/ask/answers/08/mr-copper-sumitomo-hamanaka.asp

Insight From “The Flipper”: Catching up with Paul Rotter

https://seekingalpha.com/instablog/696397-traderdaily/85609-insight-from-the-flipper-catching-up-with-paul-rotter

finally , it is a bitcoin forum afterall

HOW TO MANIPULATE THE BITCOIN MARKET

http://www.bsic.it/manipulate-bitcoin-market-introduction-13/
http://www.bsic.it/manipulate-bitcoin-market-23/
http://www.bsic.it/manipulate-bitcoin-market-33/

Honestly I have been having mixed feelings as well, at one point I was very happy that bitcoin prices were rising, till I came to know of the futures, as the Op mentioned future's are open to manipulation, but I am not sure as to how will they be able to do it, but what concerns me is in end it shall be regulated, people could loose more than they will ever gain, cause people used to hold for long term and this will be purely speculative and this is not the assect to bet on.

[aso118]

The only regret that I have is about the timing of the launch. If CME had delayed the launch by another year, I could have accumulated a lot more bitcoins. If your worry is about market manipulation by big players, the only comfort is that regulators will be watching. There will still be some rogue players, but at least not all of them will get away scot free.

[HabBear]

There's one thing you're not considering.

A bitcoin futures market is different from any other futures market because the liquidity of bitcoin is perceived to be difficult but the traditional folks on Wall St. The futures may be manipulated in large form, but will the real price of bitcoin be manipulated as much? No.

Another characteristic of bitcoin that will dilute the impact of futures speculation is the fact that this is truly a world market, a global market. The spot price isn't set through one or two central markets.

[CloudStrife]

Things like this bring some manipulation, which is normal in any market, but it doesn't hurt the protocol. Bitcoin will continue to be Bitcoin.

I think these forks are a much bigger threat.

[Stelarion]

   It is good and bad at the same time.

   It is good because it will raise awareness in Bitcoin, awareness is always good, but it is bad because people that discovered Bitcoin in that way will consider it a commodity, which it is not.

   I have spent lots of time in this past 6 years trying to persuade people that Bitcoin is currency, maybe one out of ten people that I convinced to buy some bitcoins considers them as currency, with which he can pay someone, or to be paid for something, all the rest, 9 out of 10, still think that they bought some kind of shares in some strange internet business that they can't understand. That is biggest problem of Bitcoin. People would buy Bitcoin in hope of bigger return of fiat money, but they will not work for Bitcoin, or offer their services for Bitcoin.

  So, because my humble opinion is that we will not see real price of Bitcoin before the time when we will be able to buy bread in local minimarket with Bitcoin, I don't think that arrival of CME or similar company what bring much good, neither for Bitcoin as idea, nor for the price of Bitcoin. Yes, those people will bring some money in the game, but with the purpose of bring more money out of the game, and on the long run, they will delay the time when the smal business owner will consider adopting Bitcoin, because It is probable that someone will consider to provide you goods or services for some amount of some currency, but it is much less probable that someone will provide you with goods or services for something that he considers share, stock or commodity.

  

[oblomov]

I have mixed feelings about the CME futures listing.

I will definitely trade the futures now that I am being kicked off of BFX due to being a US person.  I don't trust Polo.

The futures will reduce volatility.  Whether this is a good thing or not depends on your perspective.  The reduced vol will make BTC more attractive to mainstream investors.

A slew of new financial products will become available that are based on BTC.  After futures have been trading for a while, options on futures will become available.  This will enable strategies that have been difficult to execute to this point.

It will provide an easier route for Wall Street and governments to manipulate price.  Why hasn't gold skyrocketed even as the us debt tops $20T (but bitcoin has)?  As they say, there's a "robust" market in gold (translation: the price behaves the way that the elites want it to).

[Torque]

There's one thing you're not considering.

A bitcoin futures market is different from any other futures market because the liquidity of bitcoin is perceived to be difficult but the traditional folks on Wall St. The futures may be manipulated in large form, but will the real price of bitcoin be manipulated as much? No.

Another characteristic of bitcoin that will dilute the impact of futures speculation is the fact that this is truly a world market, a global market. The spot price isn't set through one or two central markets.

This.

The manipulators are going to have a real hard time of it as long as so many exchanges around the world are trading bitcoin 24/7.

[thecodebear]

They're only going to be able to manipulate the market if they actually buy into the market, and no just bet on the future of the market. And if the buy in then sure once they've bought in enough they'll be able to manipulate it. But for them to buy in that much the price will skyrocket.

[negancoin]

Bitcoin is too big to ignore and too big to be afraid that will failed if the CME listing Bitcoin Futures happens!
its the time for bitcoin to take a step forward and fighting in huge market like CME.

[kryptqnick]

it is now very invietable that the bitcoin markets "spot" and futures will be heavily manipulated

Strategic Trading and Manipulation with Spot Market Power

Abstract

When a spot market monopolist holds a position in the corresponding futures market, he has an
incentive to deviate from the spot market optimum to make this position more profitable.
traders without market power can manipulate futures
prices because their trades can strategically reveal to market makers similar trades by the monopolist.


https://www.wu.ac.at/fileadmin/wu/d/i/finance/wissenschaftlMitarbeiter/M%C3%BCrmann_Alexander/Bilder-Dateien/muermannshore.pdf

DETECTING MANIPULATION IN FUTURES MARKETS:
THE FERRUZZI SOYBEAN EPISODE

Abstract:
recent court and regulatory decisions have made
conviction of a manipulator problematic at best.
The ability to detect manipulation reliably suggests that existing regulation of
manipulation in futures and securities markets is inefficient because it relies on costly
preventative measures rather than ex post deterrence.


finally , it is a bitcoin forum afterall

HOW TO MANIPULATE THE BITCOIN MARKET

http://www.bsic.it/manipulate-bitcoin-market-introduction-13/

You are saying that bitcoin futures will be manipulated. Well, in a way - perhaps. However, not to forget that people always have to agree to buy or sell the coin at a certain price on a specific day in the future and that's how btc futures contract will work. This will leave some space to people making decision about the prices.
What's more, I don't think that CME will have serious impact on overall price of btc and make other exchanges adjust to it (= make users demand other prices). This exchange is big but notice that people are used to work with other kinds of products there and perhaps btc will not be very popular out there at all. If it will, though, it can bring btc to its end and even cause financial crisis.

[spazzdla]

Someone is going to make a fuck ton from shorting BTC.