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Author Topic: This Bitfinex Credit Bubble cannot end well  (Read 61726 times)
HarryT1923
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July 22, 2014, 09:10:45 AM
 #281

There is plenty of fiat on bitfinex, but often its better to lend it (I lend my fiat reserves for 2days at a time) than have it sitting doing nothing in an order book. I believe this is why the bid side on finex is often thin, especially at any significant distance from the current price.

Just for the record "This Bitfinex Credit Bubble could/might end well".

so there...

but how can we distinguish between fiat that's there to buy in and fiat that will stay lending? some are there only to lend, i am sure.
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Coinfan
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July 22, 2014, 03:01:09 PM
 #282

The flash crash was dependent on a decline of the price, that didn't occur. Without this, the measures that Bitfinex adopted will be effective to bring the swap volume slowly down.

But they won't be "safe" from a crash, because the swap volume will still be huge, even at 20 million, taking in account the orderbook. One has to go to 3 usds to find a total of 8000 btcs on the bid side.
DannyElfman
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July 22, 2014, 03:35:48 PM
 #283

Remember that the prices and trading done at one exchange will affect the trading at other exchanges. If the price in bitfinex goes too far below the prices on other exchanges then people will buy on bitfinex and sell on BTC-e for example, attempting to arbitrage, this would create liquidity on bitfinex and cause prices to fall on other exchanges.

sure, but arbitrage takes time. in this case, you'd have to sell on BTC-E, wire out fiat, wire it into Bitfinex, then buy. that sort of arbitrage is very risky to attempt in a fast-moving market like bitcoin.
If you already have fiat at an exchange then you would not need to wait for the banking system, this could be done after the fact. This kind of arbitrage could potentially work like this:

1 - You already have 1 BTC at BTC-e and $630 at bitfinex (for this example we will say that bitcoin is trading at $630)
2 - The price on bitfinex declines 15% to $535.50 so you sell your 1 BTC on BTC-e for $630, and spend the $630 that you already have on BTC-e on ~1.176 BTC.
3 - You withdraw your 1.176 BTC from bitfinex and eventually deposit it back to BTC-e.
4 - Once you see that bitfinex is not going to try to roll back trades you withdraw fiat from BTC-e, and redeposit it at bitfinex

This spot for rent.
Gargulan
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July 22, 2014, 04:07:53 PM
 #284

Remember that the prices and trading done at one exchange will affect the trading at other exchanges. If the price in bitfinex goes too far below the prices on other exchanges then people will buy on bitfinex and sell on BTC-e for example, attempting to arbitrage, this would create liquidity on bitfinex and cause prices to fall on other exchanges.

sure, but arbitrage takes time. in this case, you'd have to sell on BTC-E, wire out fiat, wire it into Bitfinex, then buy. that sort of arbitrage is very risky to attempt in a fast-moving market like bitcoin.
If you already have fiat at an exchange then you would not need to wait for the banking system, this could be done after the fact. This kind of arbitrage could potentially work like this:

1 - You already have 1 BTC at BTC-e and $630 at bitfinex (for this example we will say that bitcoin is trading at $630)
2 - The price on bitfinex declines 15% to $535.50 so you sell your 1 BTC on BTC-e for $630, and spend the $630 that you already have on BTC-e on ~1.176 BTC.
3 - You withdraw your 1.176 BTC from bitfinex and eventually deposit it back to BTC-e.
4 - Once you see that bitfinex is not going to try to roll back trades you withdraw fiat from BTC-e, and redeposit it at bitfinex


Not very practical as the price is usually consistently low on one exchange and high on another. After factoring in deposit fee (if using banking system), the profit is all gone.
davidgdg
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July 23, 2014, 12:37:34 PM
 #285

There is plenty of fiat on bitfinex, but often its better to lend it (I lend my fiat reserves for 2days at a time) than have it sitting doing nothing in an order book. I believe this is why the bid side on finex is often thin, especially at any significant distance from the current price.

Just for the record "This Bitfinex Credit Bubble could/might end well".

so there...

but how can we distinguish between fiat that's there to buy in and fiat that will stay lending? some are there only to lend, i am sure.

It's not black and white. If BTC prices on Bitfinex fell 30% below other exchanges, a lot of lenders would use their fiat to buy BTC as soon as their swaps expire. 

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nrd525
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July 23, 2014, 06:08:22 PM
 #286

Swaps are falling, FRR is falling - mass suffering.

 Grin

Don't day trade.
Tzupy
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July 23, 2014, 06:51:11 PM
 #287

$ swaps are slowly decreasing, not falling. They did fall in February, but now it's still undecided. And yet no jump in BTC swaps.

Sometimes, if it looks too bullish, it's actually bearish
molecular
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July 23, 2014, 08:25:57 PM
 #288

$ swaps are slowly decreasing, not falling. They did fall in February, but now it's still undecided. And yet no jump in BTC swaps.

BTC swaps fell from 4,200 to 2,900 on monday

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Gargulan
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July 24, 2014, 01:13:08 PM
 #289

Total swap is still over 30M. Where do you guys get the falling figure from?
Bitcoin_is_here_to_stay
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July 24, 2014, 01:20:16 PM
 #290

Total swap is still over 30M. Where do you guys get the falling figure from?

From Bitfinex stat page Wink. There is no contradiction here: they are falling, but so far above 30M. They are likely to be below 30M in a day or two.
Yololintian
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July 24, 2014, 01:41:31 PM
 #291

Long squeeze time  Cheesy
wachtwoord
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July 24, 2014, 02:19:42 PM
 #292

Long squeeze time  Cheesy

More like bear squeeze Wink
Yololintian
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July 24, 2014, 02:38:16 PM
 #293

Long squeeze time  Cheesy

More like bear squeeze Wink
Whens your margin call?  Cry
Hfertig
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July 24, 2014, 04:05:32 PM
 #294

3% down and only 1% of the credit bubble has deflated ? Looks like the ugly part is around the corner...
ArbatDeli
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July 24, 2014, 07:43:52 PM
 #295

China, please pump, and save us from a long squeeze.....

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dropt
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July 24, 2014, 07:48:26 PM
 #296

China, please pump, and save us from a long squeeze.....

The longs need to be squeezed out for a proper rally. 
ArbatDeli
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July 24, 2014, 08:53:39 PM
 #297

China, please pump, and save us from a long squeeze.....

The longs need to be squeezed out for a proper rally. 

This is true only if Bitfinex is representative of a) exchanges with margin and b) the broader market.

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wachtwoord
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July 24, 2014, 10:53:10 PM
 #298


I don't use margin.
Newbie1022
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July 25, 2014, 01:11:39 AM
 #299

BitBits
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July 26, 2014, 08:24:32 AM
 #300

...
The longs need to be squeezed out for a proper rally. 

Hate to admit it, as big drops are not really "healthy" for any market, but this is my feeling too.
Although things seem to be (slowly) getting "there"...

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