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Author Topic: This Bitfinex Credit Bubble cannot end well  (Read 61726 times)
CEG5952
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June 29, 2014, 05:17:22 PM
 #61

[kinda angry sounding rant]

Respectfully,

His "main point" is that finex traders are overleveraged to the long side. Since this is the speculation subforum, if one group of market participants does something that another group of market participants thinks is dumb, we will discuss it. That is all.

Title is a bit sensationalist, but not claiming anything per se wrong. He could change it, I guess, but doesn't have to.

To be honest, I don't think it's an inaccurate title, if sensationalist. Again, I think it would be prudent to consider the possibilities that a) the order book may not fill in to provide sufficient liquidity in a crash (right now, it's paper thin), and b) that in such a situation, we may not immediately recover most or all of those losses. At that point, we are at the whims of BFX -- how much loss will they take? How much will lenders take? Or will they just hold traders hostage indefinitely by locking the market down? Swap insurance is pathetic compared to the leverage allowed. They keep saying "it's less risky than it used to be" -- yeah, leverage allowed was even more insane before, but volume was lower and Bitstamp liquidity was there. That doesn't mean that at 2.5x that there is sufficient liquidity to justify the level of long swaps vs. order book.

And why the fuck is Bitstamp liquidity gone, now that leverage has risen to unprecedented levels?

Like someone else said, just keep thinking happy thoughts. But the answers provided by BFX do not begin to address the reality.

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June 29, 2014, 06:15:25 PM
 #62

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

I doubt most lenders lend out for months given the risk of goxings. Most are just lending out for a brief period.

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CEG5952
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June 29, 2014, 06:20:42 PM
 #63

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

I doubt most lenders lend out for months given the risk of goxings. Most are just lending out for a brief period.

I have to agree -- given the volatility of bitcoin and the track record of exchanges, I can't imagine people just want to throw their savings onto BFX (LOL) and lend it out indefinitely for rates that very well may considered usurious in many jurisdictions. I do keep funds there (I spread across several exchanges), so when I sell too early (Tongue) I lend out 2 days at a time. But always nervous, doesn't feel good being locked in those contracts....

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June 29, 2014, 07:46:12 PM
 #64

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

I used to lend $$ on BFX, but I got less comfortable with it when they removed Bistamp liquidity. I don't like how they never really explained their decision behind that, as far as I know, anyway. There is too much money lent vs. the bids, IMO, and they don't guarantee lender's money.

There is a lot of risk involved, though many don't like to admit. I guess on a forum where almost 100% are probably bulls... Cheesy

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June 29, 2014, 08:27:53 PM
 #65

There is a lot of risk involved, though many don't like to admit. I guess on a forum where almost 100% are probably bulls... Cheesy

I think there are some fundamental misunderstandings, to be honest. One poster earlier said that BFX would be "sued" if they did not fulfill their swap insurance obligations.

And what obligations would those be? Roll Eyes

They may collect a % of swap fees to insure against catastrophe, but this is a very paltry sum compared to outstanding long swaps.

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June 30, 2014, 12:49:55 AM
 #66

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

That rate is not sustainable.

And I don't think you fully realized the amount of risk you have taken.
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June 30, 2014, 01:53:16 AM
 #67

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

That rate is not sustainable.

And I don't think you fully realized the amount of risk you have taken.

I don't think many of the lenders have. It's all good if we see another raging bull market, but if not, this could seriously all end in tears. Best of luck to all the lenders there.
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June 30, 2014, 02:01:55 AM
 #68

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

That rate is not sustainable.

And I don't think you fully realized the amount of risk you have taken.

I don't think many of the lenders have. It's all good if we see another raging bull market, but if not, this could seriously all end in tears. Best of luck to all the lenders there.

You obviously have no real world experience with Bitfinex. Time and again, they have protected their lenders from flash crashes. But if you are too damn lazy to have done the research to even know these well known facts before coming into this thread and sharing your ignorant opinion, then I'm not going to be the one to enlighten you.

I have no problem with Bitfinex protecting lenders over traders. I would do the same thing.

But, whatever, fools going to fool.

If you haven't heard about what is happening with GAME, check it out.  It's revolutionizing gaming. https://bitcointalk.org/index.php?topic=1266597.0
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June 30, 2014, 05:22:30 AM
 #69

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

That rate is not sustainable.

And I don't think you fully realized the amount of risk you have taken.

I don't think many of the lenders have. It's all good if we see another raging bull market, but if not, this could seriously all end in tears. Best of luck to all the lenders there.

You obviously have no real world experience with Bitfinex. Time and again, they have protected their lenders from flash crashes. But if you are too damn lazy to have done the research to even know these well known facts before coming into this thread and sharing your ignorant opinion, then I'm not going to be the one to enlighten you.

I have no problem with Bitfinex protecting lenders over traders. I would do the same thing.

But, whatever, fools going to fool.

I don't think you're reading that correctly. Personally I am well aware of their policy. I was crushed by it when they allowed the market to rally almost 30% while I was locked in a short position with trading halted. As someone else said earlier, and as seems implied by the "if we see another raging bull market", we're not only talking about flash crashes. You're calling people fools, but what about a situation that is more than just a flash crash? What happens if the price on other exchanges DOES NOT immediately recover, and the order book can't sustain liquidated positions? You talk as if it that is IMPOSSIBLE. What happens in a crash that does not recover? Or are we just fools for not being perma bulls?

What would Bitfinex do then, in a deep and prolonged bear? Shut down trading for days, weeks? Hold traders indefinitely in leveraged positions? Hold open swap contracts indefinitely past delivery?

But you seem to prefer ad hominem, so feel free to call me an ignorant fool for seeing the possibility of a bear market in which this situation cannot sustain.

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June 30, 2014, 05:26:56 AM
 #70

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

That rate is not sustainable.

And I don't think you fully realized the amount of risk you have taken.

I don't think many of the lenders have. It's all good if we see another raging bull market, but if not, this could seriously all end in tears. Best of luck to all the lenders there.

You obviously have no real world experience with Bitfinex. Time and again, they have protected their lenders from flash crashes. But if you are too damn lazy to have done the research to even know these well known facts before coming into this thread and sharing your ignorant opinion, then I'm not going to be the one to enlighten you.

I have no problem with Bitfinex protecting lenders over traders. I would do the same thing.

But, whatever, fools going to fool.

I don't think you're reading that correctly. Personally I am well aware of their policy. I was crushed by it when they allowed the market to rally almost 30% while I was locked in a short position with trading halted. As someone else said earlier, and as seems implied by the "if we see another raging bull market", we're not only talking about flash crashes. You're calling people fools, but what about a situation that is more than just a flash crash? What happens if the price on other exchanges DOES NOT immediately recover, and the order book can't sustain liquidated positions? You talk as if it that is IMPOSSIBLE. What happens in a crash that does not recover? Or are we just fools for not being perma bulls?

What would Bitfinex do then, in a deep and prolonged bear? Shut down trading for days, weeks? Hold traders indefinitely in leveraged positions? Hold open swap contracts indefinitely past delivery?

But you seem to prefer ad hominem, so feel free to call me an ignorant fool for seeing the possibility of a bear market in which this situation cannot sustain.

Its already been established in this thread that the maximum leverage is 2.5 to 1.

It can sustain a "bear" market. Hell we've been in a bear market for over 6 months.

You don't understand leveraged markets.


If you haven't heard about what is happening with GAME, check it out.  It's revolutionizing gaming. https://bitcointalk.org/index.php?topic=1266597.0
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June 30, 2014, 05:48:58 AM
 #71

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

That rate is not sustainable.

And I don't think you fully realized the amount of risk you have taken.

I don't think many of the lenders have. It's all good if we see another raging bull market, but if not, this could seriously all end in tears. Best of luck to all the lenders there.

You obviously have no real world experience with Bitfinex. Time and again, they have protected their lenders from flash crashes. But if you are too damn lazy to have done the research to even know these well known facts before coming into this thread and sharing your ignorant opinion, then I'm not going to be the one to enlighten you.

I have no problem with Bitfinex protecting lenders over traders. I would do the same thing.

But, whatever, fools going to fool.

I don't think you're reading that correctly. Personally I am well aware of their policy. I was crushed by it when they allowed the market to rally almost 30% while I was locked in a short position with trading halted. As someone else said earlier, and as seems implied by the "if we see another raging bull market", we're not only talking about flash crashes. You're calling people fools, but what about a situation that is more than just a flash crash? What happens if the price on other exchanges DOES NOT immediately recover, and the order book can't sustain liquidated positions? You talk as if it that is IMPOSSIBLE. What happens in a crash that does not recover? Or are we just fools for not being perma bulls?

What would Bitfinex do then, in a deep and prolonged bear? Shut down trading for days, weeks? Hold traders indefinitely in leveraged positions? Hold open swap contracts indefinitely past delivery?

But you seem to prefer ad hominem, so feel free to call me an ignorant fool for seeing the possibility of a bear market in which this situation cannot sustain.

Its already been established in this thread that the maximum leverage is 2.5 to 1.

It can sustain a "bear" market. Hell we've been in a bear market for over 6 months.

You don't understand leveraged markets.

You're ignoring the very situation I am discussing. Apparently for you, all bear markets are the same.

7231.17 BTC in bids to $100 and you address none of the points. I'm far too lazy to look into detail, but at median price from there to spread ($350), that's ~ $2,500,000. 12448.98 BTC in bids to $1.00. Versus $26,597,178.54 in swaps.

Thanks, but your complete generalizations and ad hominem don't answer a damn thing. So clearly, for you, it is IMPOSSIBLE for the market to stay under a certain price level for more than x minutes, hours, days. What is that level, and why do you believe that? Or do you think that Bitfinex, in addition to halting trading and rolling back executed trades, will make bidders appear as well?

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June 30, 2014, 07:02:01 AM
 #72

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

I doubt most lenders lend out for months given the risk of goxings. Most are just lending out for a brief period.

I usually lend 66% of my money and use the remaining 33% for trading. Is a good balance, because the lends gives me a steady income (about 1.8%/week), while with the trading money I can have a good income from the market movements (like now... +30$ in 30 minutes).

Usually I lend money for 2 or 3 days, except when the offer goes over 0.4%, in this case I lend them for 30 days (but usually are closed earlier).

Nick.
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June 30, 2014, 08:17:20 AM
 #73

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

I doubt most lenders lend out for months given the risk of goxings. Most are just lending out for a brief period.

I usually lend 66% of my money and use the remaining 33% for trading. Is a good balance, because the lends gives me a steady income (about 1.8%/week), while with the trading money I can have a good income from the market movements (like now... +30$ in 30 minutes).

Usually I lend money for 2 or 3 days, except when the offer goes over 0.4%, in this case I lend them for 30 days (but usually are closed earlier).

Nick.

I see people mention 10% a month (0.333% daily rate) and you mention 1.8% a week (0.257% daily rate).

I am only seeing 0.16% daily rate right now.


As for flash crash people mentioning here, I sincerely hope it won't happen. In the event of flash crash (and price do not recover on all exchanges), it will be extremely difficulty to unwind 26M usd worth of swap. A more likely scenario would be settled outstanding swap using bitcoin with lender.


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July 01, 2014, 04:42:30 AM
 #74

more and more people are realizing 10% interest a month on bitfinex will almost certainly make more than long term btc holding.

At 10%/month (what I've been making at finex), btc would have to be 6000 in 2 years.

I doubt most lenders lend out for months given the risk of goxings. Most are just lending out for a brief period.

I usually lend 66% of my money and use the remaining 33% for trading. Is a good balance, because the lends gives me a steady income (about 1.8%/week), while with the trading money I can have a good income from the market movements (like now... +30$ in 30 minutes).

Usually I lend money for 2 or 3 days, except when the offer goes over 0.4%, in this case I lend them for 30 days (but usually are closed earlier).

Nick.

I see people mention 10% a month (0.333% daily rate) and you mention 1.8% a week (0.257% daily rate).

I am only seeing 0.16% daily rate right now.


As for flash crash people mentioning here, I sincerely hope it won't happen. In the event of flash crash (and price do not recover on all exchanges), it will be extremely difficulty to unwind 26M usd worth of swap. A more likely scenario would be settled outstanding swap using bitcoin with lender.
Lenders would need to take some kind of "haircut" if the borrower was unable to unwind their position without a 101%+ loss

This spot for rent.
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July 03, 2014, 02:36:37 PM
 #75

There's almost 29M usd swaps now on bitfinex, and to me it looks like the upward momentum has stopped. If the price ranges from 640-660 for a while with no upward movement the probability of a long squeeze is going to increase dangerously.
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July 03, 2014, 06:13:54 PM
 #76

There's almost 29M usd swaps now on bitfinex, and to me it looks like the upward momentum has stopped. If the price ranges from 640-660 for a while with no upward movement the probability of a long squeeze is going to increase dangerously.

Quite a lot of money they are holding.

What stop them from running away or claimed hack like tradefotress did?
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July 03, 2014, 06:17:01 PM
 #77

There's almost 29M usd swaps now on bitfinex, and to me it looks like the upward momentum has stopped. If the price ranges from 640-660 for a while with no upward movement the probability of a long squeeze is going to increase dangerously.

Quite a lot of money they are holding.

What stop them from running away or claimed hack like tradefotress did?

Rationality.

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July 03, 2014, 06:38:16 PM
 #78

There's almost 29M usd swaps now on bitfinex, and to me it looks like the upward momentum has stopped. If the price ranges from 640-660 for a while with no upward movement the probability of a long squeeze is going to increase dangerously.

Quite a lot of money they are holding.

What stop them from running away or claimed hack like tradefotress did?

Rationality.

Which is?
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July 04, 2014, 12:30:38 AM
 #79

There's almost 29M usd swaps now on bitfinex, and to me it looks like the upward momentum has stopped. If the price ranges from 640-660 for a while with no upward movement the probability of a long squeeze is going to increase dangerously.

Quite a lot of money they are holding.

What stop them from running away or claimed hack like tradefotress did?
They make money off of trading fees and earn a portion of the interest on Swaps. Over the long term they stand to make more money off of these fees would outweigh the amount they could get away with if they were to steal the coins from their customers.

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July 04, 2014, 12:35:19 AM
 #80

There's almost 29M usd swaps now on bitfinex, and ...
Gee, could it be that someone knows something that you don't know?
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