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Author Topic: Everything you wanted to know about BTC futures but were afraid to ask!  (Read 1299 times)
fillippone
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January 07, 2020, 08:02:15 AM
 #61

I understand your point, being delusional about bakkt launch is easy, and I also expected more volumes at the start.
But we have to remember that this was one of the most ambitious plan to smuggle bitcoin into traditional finance. It had to take time, and now it’s starting to grind (we still are miles away from full potential in my opinion).
Regarding Binance and IEO, I don’t know the subject enough, but in my opinion they are long term irrelevant (but again, I might be wrong here).

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January 07, 2020, 09:34:05 AM
 #62

I want to know the future of Bitcoin like? Especially, does the third halving event in Bitcoin history in the middle of May 2020 affect anything? The supply of Bitcoin released as a mining reward was once again cut. Will halving drive the price boom of Bitcoin?

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fillippone
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January 07, 2020, 09:53:58 AM
 #63

I want to know the future of Bitcoin like? Especially, does the third halving event in Bitcoin history in the middle of May 2020 affect anything? The supply of Bitcoin released as a mining reward was once again cut. Will halving drive the price boom of Bitcoin?
Just look at my signature and have a read:
Stock To Flow Model: Modeling Bitcoin's Value with Scarcity

fillippone
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January 14, 2020, 09:00:52 PM
 #64

Marking to Market the positions, or margining, is something it is still on the to do losit of this thread.
Anyway here you get a glimpse of the problem.
I got a question form an user, and used it to clarify some point that could be easily misunderstood b non-technical people apporaching the matter:


CME did more BTC Options volume on Day 1 than Bakkt did today.
RIP Bakkt
Hardly knew you

Tiny bit early to judge, nonetheless gutting for Rekkt Bakkt

Bakkt trades options eventually settling into real Bitcoins.
CME   trades options eventually settling into shitcoin US Dollars.

Difference is not trivial.

Usual self-promoting ad:
Everything you wanted to know about BTC options but were afraid to ask!

Yeah, but in practice, is it really true?  Are we making a distinction without a difference?

Does BAKKT really have the bitcoins that they proclaim to have?

This is a naive question, bringing me some interesting other question, I will later try to answer.

Go for the naive part: Bakkt has the Bitcoin? YES.
How do I know? Contract specification.

When you own a future, you are constantly (well, at COB) called to margin your positions. This means that when you open a position in a future you are required to post a certain amount of cash along your position. You cannot open a position if you haven’t a big enough amount of cash in a collateral cash balance at the exchange. This amount is set by the exchange to cover the daily variation of the underlying (BTC, in this case, but this mechanism is valid for any underlying). At the end of the trading day this cash  balance is adjusted to reflect the P&L of the future position: money is poured in if your future position has gone in the right direction, otherwise the exchange take from this account the daily loss (and transfer it to your counterpart). In case the residual cash balance is lower than the initial margin, you are called to refill your margins (the infamous “margin call”, or to close forced into closing the position). This means two things: firstly the exchange has no credit risk: every counterpart has a daily margining so their exposure is not too big, second the P&L is actually credited daily in the exchange, so frauds are very limited.
So, can BAKKT exit scam you? Very unlikely, as this is the opposite way this business works (also:  BAKKT and maybe CME would suffer a tremendous reputation as risk putting their own existence at risk in case of a default).

The hard part in all this reasoning: is this margining all done in BTC? As per my explanation it should. But I don’t remember anything like that in the product specification. I will check later, when real life settles a little bit.
I am going also to put this answer in my future related thread, as it is a point I would have liked to cover, but I actually didn’t.


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January 14, 2020, 10:30:54 PM
 #65

Marking to Market the positions, or margining, is something it is still on the to do losit of this thread.
Anyway here you get a glimpse of the problem.
I got a question form an user, and used it to clarify some point that could be easily misunderstood b non-technical people apporaching the matter:


CME did more BTC Options volume on Day 1 than Bakkt did today.
RIP Bakkt
Hardly knew you

Tiny bit early to judge, nonetheless gutting for Rekkt Bakkt

Bakkt trades options eventually settling into real Bitcoins.
CME   trades options eventually settling into shitcoin US Dollars.

Difference is not trivial.

Usual self-promoting ad:
Everything you wanted to know about BTC options but were afraid to ask!

Yeah, but in practice, is it really true?  Are we making a distinction without a difference?

Does BAKKT really have the bitcoins that they proclaim to have?

This is a naive question, bringing me some interesting other question, I will later try to answer.

Go for the naive part: Bakkt has the Bitcoin? YES.
How do I know? Contract specification.

When you own a future, you are constantly (well, at COB) called to margin your positions. This means that when you open a position in a future you are required to post a certain amount of cash along your position. You cannot open a position if you haven’t a big enough amount of cash in a collateral cash balance at the exchange. This amount is set by the exchange to cover the daily variation of the underlying (BTC, in this case, but this mechanism is valid for any underlying). At the end of the trading day this cash  balance is adjusted to reflect the P&L of the future position: money is poured in if your future position has gone in the right direction, otherwise the exchange take from this account the daily loss (and transfer it to your counterpart). In case the residual cash balance is lower than the initial margin, you are called to refill your margins (the infamous “margin call”, or to close forced into closing the position). This means two things: firstly the exchange has no credit risk: every counterpart has a daily margining so their exposure is not too big, second the P&L is actually credited daily in the exchange, so frauds are very limited.
So, can BAKKT exit scam you? Very unlikely, as this is the opposite way this business works (also:  BAKKT and maybe CME would suffer a tremendous reputation as risk putting their own existence at risk in case of a default).

The hard part in all this reasoning: is this margining all done in BTC? As per my explanation it should. But I don’t remember anything like that in the product specification. I will check later, when real life settles a little bit.
I am going also to put this answer in my future related thread, as it is a point I would have liked to cover, but I actually didn’t.

You likely know that I already responded in the WO thread.  Of course, I don't mind to continue such conversation over here to the extent that you or any other member wants to continue such conversation in this thread. As you can likely see from my response, I am not exactly convinced that there might not be fractional reserve practices going on that are not really tested or even revealed unless really extreme upwards BTC price conditions that are surely possible in bitcoin. 

Put BTC here: 35EVP8EePt8dyvKHaB7bXaRmKLm22YgRCA

How much alt coin diversification is necessary? if you are investing in Bitcoin, then perhaps 0%?
fillippone
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January 14, 2020, 11:21:32 PM
 #66

Of course I haven’t a clear answer.
In my opinion I see only downsides for CME and ICE to be caught playing with their customer’s money.
The main point is that this would ruin their main asset: their credibility as a top standing counterpart to trade with trillions of dollars-worth of derivatives.

I think it is not worth for them.
But it will be interesting to see how things get rolling in the next squeeze: traditional markets are not well prepared for the volatility in crypto’s.

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January 15, 2020, 05:11:21 AM
 #67

In my opinion I see only downsides for CME and ICE to be caught playing with their customer’s money.
How to get details on total orders of bitcoin future and ordered prices as well as dates of expired contracts on CME and ICE? It is important to have some picture for the future price and movements of bitcoin. Could you help me, please.

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January 15, 2020, 06:08:01 AM
 #68

Order books are the depths of orders biddin and offering each future.
Every exchange offers this data via paying access. It’s an high frequency data, and very informative for professional player, given it’s very important to evaluate market liquidity and slippage (I.e. costs) when executing large trades.

I don’t think it’s very informative for future direction, as it is very easy to place big orders away from markets pulling them off when markets approach:,hence giving fake informations about trading intentions (albeit this would be a “slightly illegal” practice).

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January 17, 2020, 08:03:18 AM
 #69

Order books are the depths of orders biddin and offering each future.
Every exchange offers this data via paying access. It’s an high frequency data, and very informative for professional player, given it’s very important to evaluate market liquidity and slippage (I.e. costs) when executing large trades.

I don’t think it’s very informative for future direction, as it is very easy to place big orders away from markets pulling them off when markets approach:,hence giving fake informations about trading intentions (albeit this would be a “slightly illegal” practice).
Appreciated your help. I implied about the filled orders, not waiting orders that can be cancelled. It is as same as tradings, data on past tradings like VPVR help us to have some strong points, resistances and supports at which the market will reach sometime in the future, pumps or dumps market will reach those ones someday in surprises of watchers.

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January 17, 2020, 12:30:17 PM
Merited by tbct_mt2 (1)
 #70

Order books are the depths of orders biddin and offering each future.
Every exchange offers this data via paying access. It’s an high frequency data, and very informative for professional player, given it’s very important to evaluate market liquidity and slippage (I.e. costs) when executing large trades.

I don’t think it’s very informative for future direction, as it is very easy to place big orders away from markets pulling them off when markets approach:,hence giving fake informations about trading intentions (albeit this would be a “slightly illegal” practice).
Appreciated your help. I implied about the filled orders, not waiting orders that can be cancelled. It is as same as tradings, data on past tradings like VPVR help us to have some strong points, resistances and supports at which the market will reach sometime in the future, pumps or dumps market will reach those ones someday in surprises of watchers.

Then what you need is historical data.
I think that a free account on tradingview would suffice for that.
Bests,
f.

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January 17, 2020, 02:58:13 PM
 #71

I would like to ask one important thing; is the risk involved really that big?

I mean we all know that there is a bigger risk to use futures for example versus buying regularly, I keep on buying bitcoin more and more and right now I reached a level that doesn't make sense because I can't really make too much profit unless bitcoin reaches $100k or something, with futures there is a bigger reward but we all know with bigger reward comes bigger risk as well.

So, I would like to ask what is the risk level of futures versus regular buying (long of course, I don't short btc)? Would you say it is very risky and could lose everything very quickly, or is it just a bit riskier? Could I just do it in a way that I risk only slightly more than regular purchase without risking to go all broke?

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January 17, 2020, 03:15:34 PM
 #72

I would like to ask one important thing; is the risk involved really that big?
<...>
I would say that buying a future is not different buying the underlying exposure.
Future, generally speaking, have the feature of liquidity, while underlying might be difficult to trade( think of OIL future, for example).
For bitcoin there are a few advantages trading future versus trading bitcoin, but those advantages are mainly appreciated by institutional investors, not private investors.
So I think in your case you should stick to investing in bitcoin, not future.
Buying future wouldn't give any significative difference from buying bitcoins.



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