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Author Topic: Today is the first settlement day for the new CME group Bitcoin futures contract  (Read 271 times)
Jet Cash
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January 17, 2018, 11:09:53 AM
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Cash-settled bitcoin futures allow traders and institutions to place bets on whether the price of bitcoin will rise or fall – without holding bitcoin itself. The CBOE's bitcoin futures are the first cryptocurrency derivative listed on a traditional exchange. Unfortunately, because of the contract's unique design, there could be some complications.

https://www.ethnews.com/market-manipulation-101-bitcoin-futures

Watch this space to see how it works out. Smiley
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January 19, 2018, 07:53:39 AM
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I hope this doesn’t turn into a monthly pump and dump.
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January 19, 2018, 12:12:30 PM
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I read an interesting theory that Bitcoin was started by the US treasury, and that it was an experiment to help them design a new world currency. They saved the output from the first year's mining to help them control prices later down the line. It's starting to look as if Bitcoins are being removed from the market, and this is a good omen for long term price trends. It will mke it unusable as a payment method though, except for large transactions of course.
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January 20, 2018, 02:37:33 PM
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I read an interesting theory that Bitcoin was started by the US treasury, and that it was an experiment to help them design a new world currency. They saved the output from the first year's mining to help them control prices later down the line. It's starting to look as if Bitcoins are being removed from the market, and this is a good omen for long term price trends. It will mke it unusable as a payment method though, except for large transactions of course.

 Grin Did you know about this? http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm

I hope this doesn’t turn into a monthly pump and dump.

Don't be surprised if it happens.
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January 20, 2018, 02:56:59 PM
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I read an interesting theory that Bitcoin was started by the US treasury, and that it was an experiment to help them design a new world currency. They saved the output from the first year's mining to help them control prices later down the line. It's starting to look as if Bitcoins are being removed from the market, and this is a good omen for long term price trends. It will mke it unusable as a payment method though, except for large transactions of course.

So it means that Bitcoin is controlled by the US treasury and all telling about BTC as decentralized is all wrong, then it means that in coming future it can also die.
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January 23, 2018, 08:19:12 PM
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Cash-settled bitcoin futures allow traders and institutions to place bets on whether the price of bitcoin will rise or fall – without holding bitcoin itself. The CBOE's bitcoin futures are the first cryptocurrency derivative listed on a traditional exchange. Unfortunately, because of the contract's unique design, there could be some complications.

https://www.ethnews.com/market-manipulation-101-bitcoin-futures

Watch this space to see how it works out. Smiley

So this Friday, 26th of Jan, the next set of futures contracts expires. Lets see what happens to BTC this weekend.

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January 25, 2018, 05:14:28 PM
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Can anyone give me a quick rundown on Bitcoin futures? How does this affect bitcoin price if no bitcoins are actually involved and they just essentially betting on the price?
Jet Cash
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January 25, 2018, 07:56:19 PM
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Well one possibility is the creation of an arbitrage opportunity. You could (say) buy a Bitcoin on one of the exchanges for $10,000, and sell it for future delivery at $11,000. Bitcoin prices are pretty volatile, so these differences could happen. The other alternative is that you could take up a long position, and as settlement approaches, you could sell physical Bitcoins to depress the price. You could then liquidate your position, and use the profit to purchase more Bitcoin. I suspect this is one way that Bitcoin will be removed from the market, and stored by the banking elite.
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January 26, 2018, 03:48:50 AM
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I hope this doesn’t turn into a monthly pump and dump.

Okcoin futures often were when people paid attention to them. This is potentially a much bigger deal so I fully expect it to become one.
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January 29, 2018, 10:24:34 PM
Merited by pawel7777 (2)
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Can anyone give me a quick rundown on Bitcoin futures? How does this affect bitcoin price if no bitcoins are actually involved and they just essentially betting on the price?


Ideally the prices of futures do not affect the underlying. Rather, the price of underlying should dictate the price of a future contract. However, futures market serves as a good indicator of the deamnd/supply anticipated and in many cases, a large premium on a derivative future might lead to a higher price on the underlying.

In case of BTC, all future contracts are cash settled. What that means is on the day of expiry, whatever be the difference between the spot price of BTC and the strike price of futures contract, will be credited into the account of winner from loser.
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January 29, 2018, 10:58:08 PM
Merited by paxmao (1)
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Can anyone give me a quick rundown on Bitcoin futures? How does this affect bitcoin price if no bitcoins are actually involved and they just essentially betting on the price?


Ideally the prices of futures do not affect the underlying. Rather, the price of underlying should dictate the price of a future contract. However, futures market serves as a good indicator of the deamnd/supply anticipated and in many cases, a large premium on a derivative future might lead to a higher price on the underlying.

In case of BTC, all future contracts are cash settled. What that means is on the day of expiry, whatever be the difference between the spot price of BTC and the strike price of futures contract, will be credited into the account of winner from loser.

That's true in an ideal world. But Bitcoin has a fairly limited supply, so it is easy to manipulate the "physical" coin price to make a substantial profit from the futures market. As there is no physical delivery, futures settlement will not affect the real price of Bitcoin, but will allow the manipulators to use the profits from a drop to repurchase a larger quantity of coin than they sold to push down the price. This can lead to another spike in the value of Bitcoin, and the creation of more debt as the sheep rush to borrow money to try to make easy profits.
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January 30, 2018, 01:00:50 AM
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Can anyone give me a quick rundown on Bitcoin futures? How does this affect bitcoin price if no bitcoins are actually involved and they just essentially betting on the price?


Ideally the prices of futures do not affect the underlying. Rather, the price of underlying should dictate the price of a future contract. However, futures market serves as a good indicator of the deamnd/supply anticipated and in many cases, a large premium on a derivative future might lead to a higher price on the underlying.

In case of BTC, all future contracts are cash settled. What that means is on the day of expiry, whatever be the difference between the spot price of BTC and the strike price of futures contract, will be credited into the account of winner from loser.

That's true in an ideal world. But Bitcoin has a fairly limited supply, so it is easy to manipulate the "physical" coin price to make a substantial profit from the futures market. As there is no physical delivery, futures settlement will not affect the real price of Bitcoin, but will allow the manipulators to use the profits from a drop to repurchase a larger quantity of coin than they sold to push down the price. This can lead to another spike in the value of Bitcoin, and the creation of more debt as the sheep rush to borrow money to try to make easy profits.

On the contrary, I think it's opposite. Because of the decentralized nature of the BTC, it is very hard to drive up/down the prices. It's like FX markets, which are usually manipulated by central banks. You would need thousands of millions of USD to flow through to make this happen.
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January 30, 2018, 10:24:27 AM
Merited by pawel7777 (1), Ginzink (1)
 #13

There is an interesting article at FT Alphaville about this on this page.
https://ftalphaville.ft.com/2017/11/29/2196222/why-bitcoin-futures-and-a-shoddy-market-structure-pose-problems/

If you aren't sure about "contango" and "backwardation", then there is an explanation involving Keynesian theory on this page, -

http://prob4u.blogspot.co.uk/2009/05/keyness-theory-of-normal-backwardation.html

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January 31, 2018, 08:38:54 AM
Merited by Jet Cash (1)
 #14

I read an interesting theory that Bitcoin was started by the US treasury, and that it was an experiment to help them design a new world currency. They saved the output from the first year's mining to help them control prices later down the line. It's starting to look as if Bitcoins are being removed from the market, and this is a good omen for long term price trends. It will mke it unusable as a payment method though, except for large transactions of course.
This would explain the block size of 1 MB then. By reading the original paper and Satoshi's old posts, I am still not sure why the block was not made bigger from the beginning, unless what you say is true. Add to that: the cost in electricity needed, quite surprising that Satoshi did not seem to be bothered by that (or maybe he was, hence again the block size of 1 MB). Plausible theory which would also explain why he apparently jumped ship seven years ago.  
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February 03, 2018, 04:07:11 PM
Merited by Welsh (2), ibminer (1)
 #15

I read an interesting theory that Bitcoin was started by the US treasury, and that it was an experiment to help them design a new world currency. They saved the output from the first year's mining to help them control prices later down the line. It's starting to look as if Bitcoins are being removed from the market, and this is a good omen for long term price trends. It will mke it unusable as a payment method though, except for large transactions of course.
This would explain the block size of 1 MB then. By reading the original paper and Satoshi's old posts, I am still not sure why the block was not made bigger from the beginning, unless what you say is true.  

There wasn't a one MB block size limit in the beginning. Bitcoin had an effective block size of 32 MB in the beginning. Satoshi changed it to one MB in the summer of 2010.

https://en.bitcoin.it/wiki/Scalability_FAQ

Quote
Bitcoin Core was initially released without an explicit block size limit. However, the code did limit network messages to a maximum of 32 MiB, setting an effective upper bound on block size.[2]

Around 15 July 2010, Satoshi Nakamoto changed Bitcoin Core’s mining code so that it wouldn’t create any blocks larger than 990,000 bytes.[3]

Two months later on 7 September 2010, Nakamoto changed Bitcoin Core’s consensus rules to reject blocks larger than 1,000,000 bytes (1 megabyte) if their block height was higher than 79,400.[4] (Block 79,400 was later produced on 12 September 2010.[5])
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February 03, 2018, 07:41:05 PM
Merited by paxmao (1)
 #16

I read an interesting theory that Bitcoin was started by the US treasury, and that it was an experiment to help them design a new world currency. They saved the output from the first year's mining to help them control prices later down the line. It's starting to look as if Bitcoins are being removed from the market, and this is a good omen for long term price trends. It will mke it unusable as a payment method though, except for large transactions of course.
This would explain the block size of 1 MB then. By reading the original paper and Satoshi's old posts, I am still not sure why the block was not made bigger from the beginning, unless what you say is true.   
There wasn't a one MB block size limit in the beginning. Bitcoin had an effective block size of 32 MB in the beginning. Satoshi changed it to one MB in the summer of 2010.

https://en.bitcoin.it/wiki/Scalability_FAQ
--snip--

Also worth noting:
--snip--. It changed in several steps, first the size of blocks it would create was limited, then the rule was changed to limit the actual size after a particular height. Later the old code was removed.--snip--

And some other good reads in 2010, just for fun.  Wink
https://bitcointalk.org/index.php?topic=287.0
https://bitcointalk.org/index.php?topic=1347.0
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