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Author Topic: This Bitfinex Credit Bubble cannot end well  (Read 61726 times)
itsAj
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August 26, 2014, 01:48:29 AM
 #561

The bubble deflated and the platform survived.  Short interest also fall back to 6.4k BTC - reduction of about 1k BTC.  I guess the number of margin-long and hodl people got wiped out.  Will probably take some time before things recover.

Yeah, but if/when things recover, there's going to be another credit bubble, I guess. Why shouldn't a new bubble form as soon as the old one is "forgotten" also, new people coming in will be willing to lend some money!
This is not necessarily true. It took a long time for this credit bubble (if you were to call it that) to inflate and eventually pop. After prices have received, the price of BTC really only fell ~$100 or less then 20% which is actually a small drop when comparing other BTC crashes.

IMO, once the leveraged positions have been cut down sufficiently and BTC finds a nice bottom to base from, we can finally rally -- perhaps even bubble -- and after that crash is when the leveraged longs will pile up, trying to buy up the correction. next credit bubble, please. Smiley
The overall amount of leverage has decreased by a lot. IIRC the total swaps outstanding on bitfinex has decreased by ~$10 million. As a result the overall price seems to have stabilized. I would guess/hope that the price will eventually start to rise from the current levels.

18 m of longs say no.

Should also check the interest rate also.

The low rate indicate it is worth the risk to long btc using leverage.

It just mitigates the risk. Usually, profitable swaps have ever-higher interest rates as price continues to move in that direction. My thinking is more so that interest rates fell so much that it made more sense to try to catch cheap coins and trade the bounces than to make peanuts lending.

WillyBTC stated it correctly the missing 10M are probably used to trade rather than lend out on peanut interest.

That is a very interesting theory. I am trying to think of ways to somehow poke holes in it but I am unable to do so. I don't think this strategy would be without risk, but would probably work if you had enough money.
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gog1
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August 26, 2014, 03:03:31 AM
 #562

The interest right now is less than a lot of credit card's interest, better risk reward ratio deploying the money else where.
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August 26, 2014, 09:37:43 AM
 #563

The interest right now is less than a lot of credit card's interest, better risk reward ratio deploying the money else where.

Yes. Won't surprise me if a lot of lenders request withdraw as the risk of putting money on exchange is high.
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August 26, 2014, 09:42:44 AM
 #564

The interest right now is less than a lot of credit card's interest, better risk reward ratio deploying the money else where.

Yes. Won't surprise me if a lot of lenders request withdraw as the risk of putting money on exchange is high.

Won't surprise me if a lot of lenders will put their money into BTC.

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August 27, 2014, 04:38:20 AM
 #565

A simple look to the bitcoin orderbook (https://www.bitfinex.com/pages/order_book) confirms that.

We had about 7000 bitcoins on bid orders down to 30 usd. Currently, we see 23,290 btcs.

Many lenders converted themselves into cliffdivers net. An activity suitable for risk-averse investors.
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August 27, 2014, 02:02:49 PM
 #566

A simple look to the bitcoin orderbook (https://www.bitfinex.com/pages/order_book) confirms that.

We had about 7000 bitcoins on bid orders down to 30 usd. Currently, we see 23,290 btcs.

Many lenders converted themselves into cliffdivers net. An activity suitable for risk-averse investors.

geez, one can dump 20k BTC, and assuming no hidden orders, this would take the price down to $250; but the average price for the whole block would come out to $428.  Quite a few millions jump to the bid side.
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August 27, 2014, 02:33:10 PM
 #567

A simple look to the bitcoin orderbook (https://www.bitfinex.com/pages/order_book) confirms that.

We had about 7000 bitcoins on bid orders down to 30 usd. Currently, we see 23,290 btcs.

Many lenders converted themselves into cliffdivers net. An activity suitable for risk-averse investors.

That happened on Friday 15th - exactly after the recent drop.
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August 27, 2014, 04:18:54 PM
 #568

A simple look to the bitcoin orderbook (https://www.bitfinex.com/pages/order_book) confirms that.

We had about 7000 bitcoins on bid orders down to 30 usd. Currently, we see 23,290 btcs.

Many lenders converted themselves into cliffdivers net. An activity suitable for risk-averse investors.

here's the visual:

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August 27, 2014, 11:48:12 PM
 #569

I guess withdrawing the money back to the bank would make it a pain to move it again to the cryptoworld.

So, many ex-lenders didn't have any other option. Lending at current rates doesn't pay the risk.

But I suppose some decided also to move it to other exchanges. With the current orderbook and the new safeguards of Bitfinex, we can't expect more flash crashes bigger than the ones at Bitstamp or other exchanges.

I guess we are always complaining. Or the flash crash was putting our money and the very survival of the exchange at risk or no more flash crashes. Damn!


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August 28, 2014, 12:06:43 AM
 #570

if you're gonna look at order books, BFX is about the last place you'd look. most manipulated order book in the market.

i suspect that margin calls and stops crippled longs to the point that demand for USD swaps became non-existent. if you have no interest in trading and want to inflate demand for USD swaps, the most effective way to do it is to portray very strong support below. make the bulls all comfy inside. i don't believe for a second that all those USD lenders who moved their fiat to the bid side have any interest in buying bitcoins.
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August 28, 2014, 12:08:46 AM
 #571

I guess withdrawing the money back to the bank would make it a pain to move it again to the cryptoworld.

So, many ex-lenders didn't have any other option. Lending at current rates doesn't pay the risk.

But I suppose some decided also to move it to other exchanges. With the current orderbook and the new safeguards of Bitfinex, we can't expect more flash crashes bigger than the ones at Bitstamp or other exchanges.

I guess we are always complaining. Or the flash crash was putting our money and the very survival of the exchange at risk or no more flash crashes. Damn!




if you have patience you will amassed a wealth of empires  Grin Grin Grin

Los desesperados publican que lo inventó el rey que rabió, porque todo son en el rabias y mas rabias, disgustos y mas disgustos, pezares y mas pezares; si el que compra algunas partidas vé que baxan, rabia de haver comprado; si suben, rabia de que no compró mas; si compra, suben, vende, gana y buelan aun á mas alto precio del que ha vendido; rabia de que vendió por menor precio: si no compra ni vende y ván subiendo, rabia de que haviendo tenido impulsos de comprar, no llegó á lograr los impulsos; si van baxando, rabia de que, haviendo tenido amagos de vender, no se resolvió á gozar los amagos; si le dan algun consejo y acierta, rabia de que no se lo dieron antes; si yerra, rabia de que se lo dieron; con que todo son inquietudes, todo arrepentimientos, tododelirios, luchando siempre lo insufrible con lo feliz, lo indomito con lo tranquilo y lo rabioso con lo deleytable.
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August 28, 2014, 12:25:30 AM
 #572

I think you let greedy go to your head on a situation of doubtful nature (shareholder or employee paid based on profit), but I also think Bitfinex didn't act well on you.

They should reach a reasonable/symbolic agreement with you, taking in account your past services.

This is off topic, but, in reality, this thread lost its noble original purpose (problem solved) and should be seen as the unofficial Bitfinex thread (I understand the need, but I dislike self-moderated ones).

This is the thread Bitfinex doesn't like very much, they stopped posting here, but always come here to read us  Grin
Gimmelfarb
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August 28, 2014, 01:05:17 AM
 #573

This is off topic, but, in reality, this thread lost its noble original purpose (problem solved) and should be seen as the unofficial Bitfinex thread (I understand the need, but I dislike self-moderated ones).

This is the thread Bitfinex doesn't like very much, they stopped posting here, but always come here to read us  Grin

indeed, i think that BFX has some unique characteristics due to its margin trading, lack of liquidity, shadiness of operators (w/ allegations of all sorts of shenanigans), horribly coded platform/trade engine, speed bump policies, etc.

it really deserves its own thread in Speculation. i never would have caught $460-->$500 in like 15 minutes if not speculating on BFX apart from the rest of the market (the first "speed bump" crash).
Coinfan
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August 28, 2014, 01:35:20 AM
 #574

The liquidity problem is solved, as I wrote above, they now have bids that amount to more than 23,000 btc down to 30usds.

I agree that they are not enough transparent on the full identity of the owners. Some of them, clearly, prefer to remain in the shadows. The usual excuse was that they had no license on Hong-Kong. Well, now they have a money transmitter license there.

This doesn't mean they are scammers. I don't think so. But it's like if they were not shore if one day an hacking won't force them to run. Like if their relative anonymity was an insurance for possible raining days.

But I do real trust Raphael. I just hope one day he won't publish something saying that he was scammed by one or two of his shareholders.
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August 28, 2014, 02:23:32 AM
 #575

The liquidity problem is solved, as I wrote above, they now have bids that amount to more than 23,000 btc down to 30usds.

I agree that they are not enough transparent on the full identity of the owners. Some of them, clearly, prefer to remain in the shadows. The usual excuse was that they had no license on Hong-Kong. Well, now they have a money transmitter license there.

This doesn't mean they are scammers. I don't think so. But it's like if they were not shore if one day an hacking won't force them to run. Like if their relative anonymity was an insurance for possible raining days.

But I do real trust Raphael. I just hope one day he won't publish something saying that he was scammed by one or two of his shareholders.

i would not say the liquidity problem is solved by any means. it cannot be "solved" simply by lenders moving fiat to the books. that would assume that USD lenders have a modicum of interest in buying BTC. i theorize that most do not -- not at all. there is no demand for USD swaps right now, so they need to pump the bid side in order to make bulls feel safe enough to start driving up USD swap interest rates again. not a chance all those bids stay on the book if we start a serious decline again.

what i will say is that based on the vast majority of reports i've heard here and on tradingview and by watching batched executions of trigger orders, is that i am highly suspicious that BFX is front running their traders. this would not require that they are necessarily stop hunting their own traders themselves, but that is a possibility as well.
Coinfan
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August 28, 2014, 02:41:26 AM
 #576

Just down to 450 usds per btc you have more than 10,686 bids. That is more than you had 2 or 3 weeks ago in all the orderbook.

Perhaps, some of the orders are fake. But they are high enough to be executed on some wild move trigged by Okcoin (as usual) in little time.

Since the last weeks, we can see a clear difference in terms of liquidity.
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August 28, 2014, 02:55:13 AM
 #577

Just down to 450 usds per btc you have more than 10,686 bids. That is more than you had 2 or 3 weeks ago in all the orderbook.

Perhaps, some of the orders are fake. But they are high enough to be executed on some wild move trigged by Okcoin (as usual) in little time.

Since the last weeks, we can see a clear difference in terms of liquidity.

that's just the point. this coincides with the post-long-squeeze lack of demand for USD swaps. the core of new bids are far out of reach for any flash crash, especially because of BFX's speed bump policy. these are USD swap lenders. imo, they are interested in lending USD, not buying bitcoins. they are there to give the appearance of bid support.

the situation is less bullish than you make it out to be, i think. but, just an opinion. Smiley
Coinfan
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August 28, 2014, 03:37:33 AM
 #578

Anyway, I think we commented on another thread and I stated my bearish perspective. The fact that there is liquidity changes nothing. They could have there bids for 50,000 btcs. The chinese exchanges are the ones leading the trend, if they go down, we'll go down, no matter how many bids there are in the bitfinex orderbook.

The only thing that the current orderbook avoids are the flash crashes exclusive to Bitfinex. If there is a flashcrash on Okcoin, we'll crash as well, at most, it will take some minutes more to eat all those bids.

If traders see any major discrepancy between Okcoin and Bitfinex, with prices way above in Bitfinex, they'll borrow bitcoins and dump them like if there was no tomorrow for bitcoin.
fdiini
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August 28, 2014, 05:37:59 PM
 #579

Anyway, I think we commented on another thread and I stated my bearish perspective. The fact that there is liquidity changes nothing. They could have there bids for 50,000 btcs. The chinese exchanges are the ones leading the trend, if they go down, we'll go down, no matter how many bids there are in the bitfinex orderbook.

The only thing that the current orderbook avoids are the flash crashes exclusive to Bitfinex. If there is a flashcrash on Okcoin, we'll crash as well, at most, it will take some minutes more to eat all those bids.

If traders see any major discrepancy between Okcoin and Bitfinex, with prices way above in Bitfinex, they'll borrow bitcoins and dump them like if there was no tomorrow for bitcoin.

Doubt the exchange will allow borrower to withdraw btc.

The lending/borrowing model work on bitfinex because lenders know borrowers will not be able to run away with lender money.
Coinfan
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August 28, 2014, 06:05:29 PM
 #580

Yes, of course Bitfinex doesn't allow borrowers to transfer the bitcoins out.

I meant traders will borrow bitcoins and short the market, by selling them on Bitfinex and buying them again later at cheaper prices.
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