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Author Topic: This Bitfinex Credit Bubble cannot end well  (Read 61726 times)
transient858
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August 28, 2014, 08:25:11 PM
 #581

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.

Doesn't work well this way as China RMB is a blocked currency.

During no-news period, the price on okcoin and the rest of the exchanges track each other price quite well. But when some big event happen, the chance of arbitrage is none.
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August 28, 2014, 08:31:25 PM
 #582

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.

Doesn't work well this way as China RMB is a blocked currency.

During no-news period, the price on okcoin and the rest of the exchanges track each other price quite well. But when some big event happen, the chance of arbitrage is none.

True arbitrage with Chinese exchanges probably does not happen on any large scale for this reason. However, when exchanges are very out of sync, traders do move coins to and from the Chinese exchanges to trade against the spread. But this is not real arbitrage -- only taking advantage of temporary price gaps.

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August 28, 2014, 10:09:31 PM
 #583

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.

Doesn't work well this way as China RMB is a blocked currency.

During no-news period, the price on okcoin and the rest of the exchanges track each other price quite well. But when some big event happen, the chance of arbitrage is none.

True arbitrage with Chinese exchanges probably does not happen on any large scale for this reason. However, when exchanges are very out of sync, traders do move coins to and from the Chinese exchanges to trade against the spread. But this is not real arbitrage -- only taking advantage of temporary price gaps.

The spread has to be wide enough to take on the risk of the exchange going bust due to government shutting them down.
wasserman99
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August 29, 2014, 06:49:40 PM
 #584

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.
I don't see any reason why they would not be able to withdraw their bitcoin as long as their post withdrawal equity is above the minimum ratio. If someone owns bitcoin but has a little bit borrowed against some of it there isn't any reason why the amount of bitcoin that is not borrowed against cannot be withdrawn.

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September 07, 2014, 04:20:45 AM
 #585

You can withdraw bitcoins that aren't necessary to fulfill the required collateral to the borrowed money.
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September 07, 2014, 04:28:12 AM
 #586

You can withdraw bitcoins that aren't necessary to fulfill the required collateral to the borrowed money.
I think people doing this are only increasing their risk of getting a margin call and increasing the overall risk of there being another margin/leverage related crash. When people are keeping as little equity in their account as possible, they are making it so that there is less room for "error" (meaning less room to weather a minor price decline).
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September 07, 2014, 12:04:58 PM
 #587

You can withdraw bitcoins that aren't necessary to fulfill the required collateral to the borrowed money.
= your BTC... Roll Eyes

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September 08, 2014, 02:17:50 AM
 #588

Yes, but as you know, not all of the borrower bitcoins can be withdraw. The borrowed bitcoins are stuck, but also any of his bitcoins necessary to keep the required collateral to the swap.

Anyway, right now, I think all people borrowing bitcoins to go long are playing Russian roulette with their money. But, well, there is always somebody thinking "You have to be crazy not to buy bitcoin at these prices, I'm going to sell the house and one kidney to buy bitcoins".

I guess he will be ready to sell 25% of his blood and, perhaps, will even think about the second kidney ("I could do dialysis"), if we breach 440 usd per btc. But for me, if this price is breached, bitcoin will be on a very dangerous situation. I have been bearish all year, with very little short-term exceptions.

Still waiting for the right price to go in again (down below), but still positive on the long-term.
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September 13, 2014, 05:12:32 PM
 #589

Quote
Bitstamp | Total bids: 6939329 USD. Total asks: 22709 BTC. Ratio: 305.56511 USD/BTC. | Data vintage: 0.0294 seconds


hmmm ok bitstamp


Quote
gribble> Bitfinex | Total bids: 9662015 USD. Total asks: 7565 BTC. Ratio: 1277.03315 USD/BTC. | Data vintage: 0.0269 seconds

margin data via http://www.bfxdata.com

longs
Quote
0.0402   19 640 310.00   18:43:01 13-09-2014

shorts

Quote
0.0108   5 870.30   18:43:01 13-09-2014


9662015-19640310=-9978295
7565-5870,30=1694,7

-9978295/1694,7=-5887,94181861096359237623


best ratio ever  Grin 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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September 13, 2014, 05:39:50 PM
 #590

Those bids that look apparently bullish come from the squeezed longs. They are waiting to buy at lower prices.
Bitfinex may be now the best choice for big dumpers.

Sometimes, if it looks too bullish, it's actually bearish
myself
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chaos is fun...…damental :)


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September 19, 2014, 08:44:05 AM
 #591

 Wink Wink

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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September 19, 2014, 07:35:45 PM
 #592

I was about to post earlier this week that the Finex credit crunch appears resolved when we were 470'ish. 

Seems like we've entered another round of POP.
Nekrobios
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September 19, 2014, 07:39:16 PM
 #593

http://coinbrief.net/credit-bubble-bitcoin-margin-trading/

Sure wonder where he got that idea from. Wink
removebeforeflight
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September 20, 2014, 12:37:41 AM
 #594

Yeh! My loaned USD got closed out and returned (15 days early). Bought some BTC !

Coinfan
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September 20, 2014, 05:17:11 AM
 #595

20.5 million and growing.

My first reaction was to think that Bitfinex learned how to handle big amounts of Swaps, so there was no ground for being concerned, even if the amount of swaps goes over 30 million again. Especially, taking in account the strong bids on the "new" orderbook.

However, my target for bitcoin price (it might be wrong, trust me not) is still much lower than the current price. And it might get there faster than expected and this time will be global crash, not a crash restricted to Bitfinex. That is, the Bitfinex price won't go back up again after 30m or so as in a simple flash crash motivated by liquidation of long positions. It might keep going down.

Therefore, the new Bitfinex system of limiting the dump of the squeezed/liquidated longs might mean selling even lower. It will be wise to apply it only as long as the price at Bitfinex is lower than the general price. Otherwise, the amount of the sell can end up again being short to pay the lenders.

And as the interest rate go up again, some of the bidders [that are hoping to pick a few cliffdivers (that is, liquidated bulls)] might decide it's safer to lend again, removing some of those new bids and weakening again the orderbook.

About the bulls on borrowed money: the only lesson history teaches us is that people don't learn from history. Trying to guess a bottom of a bearish trend on borrowed money is playing the Russian roulette with money.
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October 04, 2014, 12:32:53 PM
 #596

More may be coming now I suppose? I don't see any terrible bubble in the long swaps anymore, but we do have near 20 million USD left and the price is going down hard.
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October 04, 2014, 01:48:46 PM
 #597

The time has come for every single long position to be in the red  Smiley
nrd525
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October 04, 2014, 06:55:20 PM
 #598

While the USD amount of swaps is down from the peak, it could actually represent a larger BTC long position. 

It is more likely that there are a large number of positions in the red, but if people have put new money into the exchange it could represent as many as 50,000 bitcoins (at $400).

So we might yet seem a flash crash.  I've been wondering if the bottom would be a slow reversal, or if it'd have a mini flash crash.  December 2011 had a slow reversal if I recall correctly.

Don't day trade.
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October 04, 2014, 06:58:50 PM
 #599

While the USD amount of swaps is down from the peak, it could actually represent a larger BTC long position. 

It is more likely that there are a large number of positions in the red, but if people have put new money into the exchange it could represent as many as 50,000 bitcoins (at $400).

So we might yet seem a flash crash.  I've been wondering if the bottom would be a slow reversal, or if it'd have a mini flash crash.  December 2011 had a slow reversal if I recall correctly.

It isn't as simple as that. The number of short contracts is also at ATH, no? Once the selling stalls, a squeeze is possible.
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October 04, 2014, 08:12:55 PM
 #600

While the USD amount of swaps is down from the peak, it could actually represent a larger BTC long position.  

It is more likely that there are a large number of positions in the red, but if people have put new money into the exchange it could represent as many as 50,000 bitcoins (at $400).

So we might yet seem a flash crash.  I've been wondering if the bottom would be a slow reversal, or if it'd have a mini flash crash.  December 2011 had a slow reversal if I recall correctly.

It isn't as simple as that. The number of short contracts is also at ATH, no? Once the selling stalls, a squeeze is possible.


50,000 long vs 12,000 short battling on a downward trend. Pretty simple i'd say.

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