bitfinex interest rates

[giarc]

Bitfinex USD borrowing rates are skyrocketing, any views on what this means in terms of demand for bitcoins?

[notme]

Bitfinex USD borrowing rates are skyrocketing, any views on what this means in terms of demand for bitcoins?

You must be new.  A few weeks ago people were paying 0.9% per day.

[giarc]

Fairly new to bitfinex but a long time lurker

That's madness, it implies at least a 25 times gain in bitcoin price per year.

[notme]

Fairly new to bitfinex but a long time lurker

That's madness, it implies at least a 25 times gain in bitcoin price per year.

Which year did it not exceed that?

[giarc]

Fairly new to bitfinex but a long time lurker

That's madness, it implies at least a 25 times gain in bitcoin price per year.

Which year did it not exceed that?

Past performance does not reflect future returns!!

Even if bitcoin were to gain as high a market capitalisation as gold its price per coin would be about $120,000 a piece, realistically in the most optimistic example inn the next 5 years it could maybe make 10% of this at very most.

This implies a fair price at the end of those 5 years of $12,000 now lets say it doubles that due to fluctuations which a trader could take advantage of that's $24,000.

Lets just run the 25 time the current price (mtgox) $1000 is $25000.

In other words this five year crazy optimist scenario already stretched to double the most optimistic price would have to happen in a year to have the trader come even close to breaking even.

[notme]

Fairly new to bitfinex but a long time lurker

That's madness, it implies at least a 25 times gain in bitcoin price per year.

Which year did it not exceed that?

Past performance does not reflect future returns!!

Even if bitcoin were to gain as high a market capitalisation as gold its price per coin would be about $120,000 a piece, realistically in the most optimistic example inn the next 5 years it could maybe make 10% of this at very most.

This implies a fair price at the end of those 5 years of $12,000 now lets say it doubles that due to fluctuations which a trader could take advantage of that's $24,000.

Lets just run the 25 time the current price (mtgox) $1000 is $25000.

In other words this five year crazy optimist scenario already stretched to double the most optimistic price would have to happen in a year to have the trader come even close to breaking even.

So when you stack assumptions on top of assumptions, it doesn't add up?  That's pretty convincing.

Besides, you are forgetting that most bitfinex positions are short term, so they only have to beat the interest rate for the duration of their trade.

[byronbb]

But why isn't bitfinex just cornering this lending market and borrowing much USD a they can and lending out at these incredible rates?

[Ibian]

Past performance does not reflect future returns!!

Except when it totally does.

Now I'm not complaining, it is a valid and very common opinion and you know what they say about agreeing with the majority, but if you are the sort to put your money where your mouth is one option is this: http://bitbet.us/bet/635/1btc-10-000-usd/

[vokain]

Fairly new to bitfinex but a long time lurker

That's madness, it implies at least a 25 times gain in bitcoin price per year.

I don't see the math??

current lending rates are around .2%/day
.2%*365days=73%/year

that's less than a double per year to profit

[tysat]

Fairly new to bitfinex but a long time lurker

That's madness, it implies at least a 25 times gain in bitcoin price per year.

I don't see the math??

current lending rates is around .2%/day
.2%*365days=73%/year

that's less than a double per year to profit

You didn't compound the interest, it's 0.2% ^ 365 which comes out to about 206% yearly.

[vokain]

ah

[Elwar]

Taking into account compounding interest 2013 would have given you an average of 1% per day by just buying and holding bitcoin.

[sgbett]

But why isn't bitfinex just cornering this lending market and borrowing much USD a they can and lending out at these incredible rates?

Because that adds risk. What if people don't borrow? You are stuck paying interest on debt.

Far better to guarantee zero downside, even if you lose some speculative upside.

Gauranteed profit is always the smartest move in the long term.

[thezerg]

But why isn't bitfinex just cornering this lending market and borrowing much USD a they can and lending out at these incredible rates?

Because that adds risk. What if people don't borrow? You are stuck paying interest on debt.

Far better to guarantee zero downside, even if you lose some speculative upside.

Gauranteed profit is always the smartest move in the long term.

1 or 2 days lending at bitfinex can make 1 year of interest payments so I doubt that is the issue.  more likely cant get loan... banks do ask what 4 u know.  and not risk of not making payments but of losing it all if they cant unwind insolvent positions.  happened in april had to be bailed out by big investor iirc.  also could be that they ARE doing so as much as possible.

[sgbett]

But why isn't bitfinex just cornering this lending market and borrowing much USD a they can and lending out at these incredible rates?

Because that adds risk. What if people don't borrow? You are stuck paying interest on debt.

Far better to guarantee zero downside, even if you lose some speculative upside.

Gauranteed profit is always the smartest move in the long term.

1 or 2 days lending at bitfinex can make 1 year of interest payments so I doubt that is the issue.  more likely cant get loan... banks do ask what 4 u know.  and not risk of not making payments but of losing it all if they cant unwind insolvent positions.  happened in april had to be bailed out by big investor iirc.  also could be that they ARE doing so as much as possible.

And your explanation why its better to take risk over guaranteed profit is... ?

[pietje]

But why isn't bitfinex just cornering this lending market and borrowing much USD a they can and lending out at these incredible rates?

Because that adds risk. What if people don't borrow? You are stuck paying interest on debt.

Far better to guarantee zero downside, even if you lose some speculative upside.

Gauranteed profit is always the smartest move in the long term.

1 or 2 days lending at bitfinex can make 1 year of interest payments so I doubt that is the issue.  more likely cant get loan... banks do ask what 4 u know.  and not risk of not making payments but of losing it all if they cant unwind insolvent positions.  happened in april had to be bailed out by big investor iirc.  also could be that they ARE doing so as much as possible.

But then there is still a risk involved and its not a guarenteed profit.

[Brassguy]

"You are not exposed to exchange risk when you lend with Bitfinex. The exchange risk is taken on by the trader, and, in case his position loses money, he will cover the loss with funds in his trading wallet. If a trader losses more than his balance can cover, liquidity providers can lose part of their funds."

Really? This right here... how am I not exposed to risk when I lend with Bitfinex?

Totally misunderstood the conversation...