USD Swap demand on Bitfinex has never been so high

[Hunyadi]

TERA if there would be a lot of demand for shorting BTC would you think this is bullish?

It's not a demand for bitcoin. It's actually a demand for USD. It's called "USD swap demand" is a market for people to borrow USD, based on the interest rate.

 

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[BuildTheFuture]

I read OKCoin has re-enabled margin trading/lending (http://www.coindesk.com/okcoin-international-markets-margin-trading-launch/) - anyone know of a site that tracks their usage data like bfxdata does for Bitfinex? Also I'm curious if the other Chinese exchanges are going to reverse course and re-enable margin.

[MoreFun]

TERA if there would be a lot of demand for shorting BTC would you think this is bullish?

It's not a demand for bitcoin. It's actually a demand for USD. It's called "USD swap demand" is a market for people to borrow USD, based on the interest rate.

As far as I know you can't borrow USD and pay the rent or food. The only purpose is to buy BTC.

[MatTheCat]

TERA if there would be a lot of demand for shorting BTC would you think this is bullish?

It's not a demand for bitcoin. It's actually a demand for USD. It's called "USD swap demand" is a market for people to borrow USD, based on the interest rate.

As far as I know you can't borrow USD and pay the rent or food. The only purpose is to buy BTC.

If even half of the USD even actually exists in the exchanges lending account. If it isn't all just a fractional reserve number game that the exchange is playing with it's traders safe in the knowledge that they know where the stop losses are and they have the ability to front run the market.

[Gimmelfarb]

TERA if there would be a lot of demand for shorting BTC would you think this is bullish?

It's not a demand for bitcoin. It's actually a demand for USD. It's called "USD swap demand" is a market for people to borrow USD, based on the interest rate.

As far as I know you can't borrow USD and pay the rent or food. The only purpose is to buy BTC.

If even half of the USD even actually exists in the exchanges lending account. If it isn't all just a fractional reserve number game that the exchange is playing with it's traders safe in the knowledge that they know where the stop losses are and they have the ability to front run the market.

certainly, BFX insiders have the ability to do this. and nothing they have done in the past has shown me that they are ABOVE doing this. but do you have any evidence that they are front running?

[hloren70]

So would you guys recommend lending money to Bitfinex to take advantage of the interest? Are they trustworthy? Do you have to provide documentation to verify your account?

[Dalmar]

So would you guys recommend lending money to Bitfinex to take advantage of the interest? Are they trustworthy? Do you have to provide documentation to verify your account?

It is not recommended unless you are already trading on bitfinex and sold near a top and are waiting for a few days for the market to go down. Lending out for the long term is too risky due to flash crashes and exchange goxings.

[CEG5952]

So would you guys recommend lending money to Bitfinex to take advantage of the interest? Are they trustworthy? Do you have to provide documentation to verify your account?

It is not recommended unless you are already trading on bitfinex and sold near a top and are waiting for a few days for the market to go down. Lending out for the long term is too risky due to flash crashes and exchange goxings.

To be honest, I'm too scared to lend there now that they don't route orders through Bitstamp. Book is scary thin. I used to lend whenever I sold (unless I was very, very sure and went short), but not anymore.

[MatTheCat]

certainly, BFX insiders have the ability to do this. and nothing they have done in the past has shown me that they are ABOVE doing this. but do you have any evidence that they are front running?

Nope. Like the hapless poker player who was cheated by an elaborate operation involving hidden cameras and wireless tapping communication device, I have absolutely no evidence whatsoever but know when I have been had. Without having any concrete evidence or any understanding of precisely how BFX might fuck traders over, I just think that this exchange stinks of pish and shit.... I have had some gut wrenching experiences on Bitfinex, where I was conned out of a stunning short trade with my stop order being the very top of the market as a result of a last minute FU rally after all the other exchanges had gone of in other direction. After that, I stopped trading with a stop on BFX as I just seen a stop order as a means of assisting the exchange in ripping me off. I came to regret that particular practice later on to the tune of several thousand dollars.

Obviously, everyone looks to Bitstamp when analysing Bitcoin, but make a point of also checking out Bitfinex. You will soon begin to twig on that the Bitfinex basically follows Stamp, except it is a lot more rough round the edges seldom forming any clean chart formations, it breaches important trendlines often as though they never mattered, and full of fakes outs on just about every consolidation phase. You will therefore soon also twig that it is much easier charting the future course of Bitcoin with Stamp than through Bitfinex. This is because Stamp isn't lying to us about market psychology/action whereas Bitfinex does lie to us. Look at the trading today. Stamp stays within the logical triangle formation pattern whilst Bitfinex is acting like it is about to break out to the upside. It is not about to break to the upside, but is farming a whole lot of stop orders, or at least trying to push the market into doing so on the exchanges behalf. I am guessing there must be some hefty real sell orders in between $595 and $600, otherwise Bitfinex would have spiked away above that as short stop loss after short stop loss is triggered by the crooks who know where they are and whose algorithms tell them when it is profitable to farm them or not. Pay attention to Bitfinex or indeed Huobi, and you will notice all manner of peculiarities in their chart actions that you just don't see with Bitstamp.

I have no proof. But I know that Bitfinex is a fucking sewer rat of an exchange.

I would wager that the next grand scale BTC daylight robbery a la Bitcoinica, MtGox etc, happens with Bitfinex.

[wonkytonky]

it's also possible a big whale with fiat  has a few accounts taking loans cheap .; and lending his own fiat more expensive..
which means nothing is wrong with bfx  

which also supports my theory why the swap doesnt realy go down even in big sellofs.. 

[wachtwoord]

TERA if there would be a lot of demand for shorting BTC would you think this is bullish?

It's not a demand for bitcoin. It's actually a demand for USD. It's called "USD swap demand" is a market for people to borrow USD, based on the interest rate.

 

I must agree with TERRA here.

Luckily there are many other reasons to be bullish

[scryptasicminer]

certainly, BFX insiders have the ability to do this. and nothing they have done in the past has shown me that they are ABOVE doing this. but do you have any evidence that they are front running?

Nope. Like the hapless poker player who was cheated by an elaborate operation involving hidden cameras and wireless tapping communication device, I have absolutely no evidence whatsoever but know when I have been had. Without having any concrete evidence or any understanding of precisely how BFX might fuck traders over, I just think that this exchange stinks of pish and shit.... I have had some gut wrenching experiences on Bitfinex, where I was conned out of a stunning short trade with my stop order being the very top of the market as a result of a last minute FU rally after all the other exchanges had gone of in other direction. After that, I stopped trading with a stop on BFX as I just seen a stop order as a means of assisting the exchange in ripping me off. I came to regret that particular practice later on to the tune of several thousand dollars.

Obviously, everyone looks to Bitstamp when analysing Bitcoin, but make a point of also checking out Bitfinex. You will soon begin to twig on that the Bitfinex basically follows Stamp, except it is a lot more rough round the edges seldom forming any clean chart formations, it breaches important trendlines often as though they never mattered, and full of fakes outs on just about every consolidation phase. You will therefore soon also twig that it is much easier charting the future course of Bitcoin with Stamp than through Bitfinex. This is because Stamp isn't lying to us about market psychology/action whereas Bitfinex does lie to us. Look at the trading today. Stamp stays within the logical triangle formation pattern whilst Bitfinex is acting like it is about to break out to the upside. It is not about to break to the upside, but is farming a whole lot of stop orders, or at least trying to push the market into doing so on the exchanges behalf. I am guessing there must be some hefty real sell orders in between $595 and $600, otherwise Bitfinex would have spiked away above that as short stop loss after short stop loss is triggered by the crooks who know where they are and whose algorithms tell them when it is profitable to farm them or not. Pay attention to Bitfinex or indeed Huobi, and you will notice all manner of peculiarities in their chart actions that you just don't see with Bitstamp.

I have no proof. But I know that Bitfinex is a fucking sewer rat of an exchange.

I would wager that the next grand scale BTC daylight robbery a la Bitcoinica, MtGox etc, happens with Bitfinex.

If something bad happen to bitfinex, you have the identity of their CEO and CFO and know who to go after.

[MatTheCat]

If something bad happen to bitfinex, you have the identity of their CEO and CFO and know who to go after.

Naturally, because I am an international hitman and man of mystery. Capable of striking my prey like a lightning bolt before fading back into the shadows never to be seen again.....or maybe not, so how about this:

"if something bad happen with MtGox, you have identity of their CEO and know who to go after"

"if something bad happen to MtGox, you have picture of Mark Karpeles you can stab with a pen as you mourn the wealth that you thought you had, that has all went up in smoke"

[scryptasicminer]

If something bad happen to bitfinex, you have the identity of their CEO and CFO and know who to go after.

Naturally, because I am an international hitman and man of mystery. Capable of striking my prey like a lightning bolt before fading back into the shadows never to be seen again.....or maybe not, so how about this:

"if something bad happen with MtGox, you have identity of their CEO and know who to go after"

"if something bad happen to MtGox, you have picture of Mark Karpeles you can stab with a pen as you mourn the wealth that you thought you had, that has all went up in smoke"

Mark Karpeles probably gamble using customer money and lose a great deal of money shorting bitcoin (and claimed hack/malleability attack). MtGox was worth at least 300M given the volume and the fee the company charged per trade.

If you ask any sane person (non-gambler), most people will think this guy is an idiot for ruining a sound business.

After seeing the amount of legal trouble Mark got into, I seriously doubt the current batch of exchange owners will make the same idiotic mistake.

[ElectricMucus]

If something bad happen to bitfinex, you have the identity of their CEO and CFO and know who to go after.

Naturally, because I am an international hitman and man of mystery. Capable of striking my prey like a lightning bolt before fading back into the shadows never to be seen again.....or maybe not, so how about this:

"if something bad happen with MtGox, you have identity of their CEO and know who to go after"

"if something bad happen to MtGox, you have picture of Mark Karpeles you can stab with a pen as you mourn the wealth that you thought you had, that has all went up in smoke"

not quite yet
"if something bad happen to MtGox, you have the twitter of Mark Karpeles you can taunt mad insults on while you gawk at a /r/bitcoin about how you found out which luxury apartment his photo of a sunset was taken from."

[MatTheCat]

Mark Karpeles probably gamble using customer money and lose a great deal of money shorting bitcoin (and claimed hack/malleability attack). MtGox was worth at least 300M given the volume and the fee the company charged per trade.

If you ask any sane person (non-gambler), most people will think this guy is an idiot for ruining a sound business.

After seeing the amount of legal trouble Mark got into, I seriously doubt the current batch of exchange owners will make the same idiotic mistake.

Did you know that Karpeles has a history of committing fraud?

Seeing as one of his fake volume trading bots, Willy, was set to make constant Bitcoin purchases regardless of price every 10 minutes or so, I would seriously doubt he would be into shorting Bitcoin. All he would be doing was buying and holding Bitcoin, ramp it with fake volume, sell expensive Bitcoin, crash market with the intent of equalizing all the fake Bitcoin trade he used to ramp market in first place (i.e. buying units back for fraction of what he sold for and keeping the mark-up for himself) and then wash, rinse, repeat. Obviously though, things ran out from under his control. You think none of the current batch of exchange owners would take the same risks as Karpeles? What is stopping them? If you ran your own exchange and you could multiply your earnings by an order of several magnitude, by using your inside knowledge to trigger stop orders, squeeze out margin traders, and generally front run the market, wouldn't you be tempted? You wouldn't have to go apeshit crazy like Karpeles did and you could still make a killing through taking liberties with your customers funds and trust whilst exposing yourself to only minimal risk. What Karpeles done was had a bot that just kept on buying and buying and buying. The man was either an idiot, delusional, or both. What shrewder and/or more risk adverse corrupt exchange operators could do is simply use their inside knowledge of trader orders and their ability to front run the market to skim a steady and continual layer of extra cream out of the market when things are relatively stable, and then take big extra chunks of meat out the market when things are volatile without exposing their manipulation to the dangers of going against the overall trend.

[nick32768]

So would you guys recommend lending money to Bitfinex to take advantage of the interest? Are they trustworthy? Do you have to provide documentation to verify your account?

It is not recommended unless you are already trading on bitfinex and sold near a top and are waiting for a few days for the market to go down. Lending out for the long term is too risky due to flash crashes and exchange goxings.

I was lending all the money I have on BFX the day of the crash, I think it was Feb 10th, and I did not had any loss. The only thing that happened was: many of my lend lots where closed very rapidly (i think because of people were automatically forced to sell).

The only real risk tat I see with BFX is the fact that the company is really small and not incorporated, so they can simply vanish with not so much consequences for them.

Nick.

[leopard2]

It's bearish. The amount of money loaned out to take longs is now at an all time high meaning prices have been supported on fake money. Now the supply of real money to lend out has dried up which results in the supply/demand you mentioned. This is going to cause interest rates to rise. The higher interest rates will force people to dump as it is no longer profitable to hold with the way the trend currently is. This could end up turning into a cascade of stop losses and margin calls as 40,000BTC purchased with loaned money are dumped.

uh, what?

it means that people want to borrow 11 million USD, (to buy Bitcoins, what else?), but they can only get 1.1 million

isn't that extremely bullish?!

[TERA]

It's bearish. The amount of money loaned out to take longs is now at an all time high meaning prices have been supported on fake money. Now the supply of real money to lend out has dried up which results in the supply/demand you mentioned. This is going to cause interest rates to rise. The higher interest rates will force people to dump as it is no longer profitable to hold with the way the trend currently is. This could end up turning into a cascade of stop losses and margin calls as 40,000BTC purchased with loaned money are dumped.

uh, what?

it means that people want to borrow 11 million USD, (to buy Bitcoins, what else?), but they can only get 1.1 million

isn't that extremely bullish?!

No. Loan demand is not bullish because in order to fill the loan, someone else has to front the USD, which means that those USD cannot be used to buy bitcoins. It all sums out to zero. The only thing that really causes growth is when new fiat is wired in, which actually increases the amount of USD which can be used to bid on Bitcoins at a given time. Actually I would prefer no loans were given out at all and that all USD were directly used to obtain real bitcoins. The margin state is actually more bearish than the non margin state. Here are some more reasons why:

1. The margin positions only exist on paper in the user's account. The only thing he can possibly do with his position is dump it to take the shiny green profit figure shown next it. The user cannot withdraw those bitcoins or participate in the bitcoin ecosystem.
2. The user is subject to an interest rate which means it is most likely intended only to do a short term trade, and if the trend is not rising fast enough to be worth interest rates then he will dump.
3. The above factors reveal the psychology of a margin user which is just to do short term trading, dump, and make profits rather than being a long term investor in Bitcoin.
4. The rising interest rates entice bitcoin holders to dump their bitcoins to obtain USD to fulfill the loan demand.
5. The margin user can be liquidated and forced to dump if the price drops too low.
6. If people with real USD decide to leave the exchange after the margin contract period is up, this will also force liquidate the margin users.

FYI actually the loans can also be used to buy Litecoin and Darkcoin (duh) but the points above are stronger / more relevant.

[trader001]

It's bearish. The amount of money loaned out to take longs is now at an all time high meaning prices have been supported on fake money. Now the supply of real money to lend out has dried up which results in the supply/demand you mentioned. This is going to cause interest rates to rise. The higher interest rates will force people to dump as it is no longer profitable to hold with the way the trend currently is. This could end up turning into a cascade of stop losses and margin calls as 40,000BTC purchased with loaned money are dumped.

uh, what?

it means that people want to borrow 11 million USD, (to buy Bitcoins, what else?), but they can only get 1.1 million

isn't that extremely bullish?!

No. Loan demand is not bullish because in order to fill the loan, someone else has to front the USD, which means that those USD cannot be used to buy bitcoins. It all sums out to zero. The only thing that really causes growth is when new fiat is wired in, which actually increases the amount of USD which can be used to bid on Bitcoins at a given time. Actually I would prefer no loans were given out at all and that all USD were directly used to obtain real bitcoins. The margin state is actually more bearish than the non margin state. Here are some more reasons why:

1. The margin positions only exist on paper in the user's account. The only thing he can possibly do with his position is dump it to take the shiny green profit figure shown next it. The user cannot withdraw those bitcoins or participate in the bitcoin ecosystem.
2. The user is subject to an interest rate which means it is most likely intended only to do a short term trade, and if the trend is not rising fast enough to be worth interest rates then he will dump.
3. The above factors reveal the psychology of a margin user which is just to do short term trading, dump, and make profits rather than being a long term investor in Bitcoin.
4. The rising interest rates entice bitcoin holders to dump their bitcoins to obtain USD to fulfill the loan demand.
5. The margin user can be liquidated and forced to dump if the price drops too low.
6. If people with real USD decide to leave the exchange after the margin contract period is up, this will also force liquidate the margin users.

FYI actually the loans can also be used to buy Litecoin and Darkcoin (duh) but the points above are stronger / more relevant.

Good analysis.

But the final point is not right. Trader can't margin trade darkcoin yet.