nrd525 Market Tracker

[nrd525]

Considering how much the pound fell ($1.50 to $1.33 at the bottom), and that Bitcoin was already partially retracing the decline from 790 from 540 - the price increase due to Brexit was weaker than I expected.

 In other news, it looks like progress on Segregated Witness - so that is good.

[Fakhoury]

Considering how much the pound fell ($1.50 to $1.33 at the bottom), and that Bitcoin was already partially retracing the decline from 790 from 540 - the price increase due to Brexit was weaker than I expected.

 In other news, it looks like progress on Segregated Witness - so that is good.

It has been merged buddy

[nrd525]

LTC (in BTC) is at the lowest level in the past 2 years.  It is doing better in USD, due to BTC's recovery.

[nrd525]

Halving is in 6 days and 12 hours.

http://www.bitcoinblockhalf.com

Are we going to see another serious pre or post halving pump?  I'm guessing not and that we might see moves like the latest increase to 705.  A nice increase, but it didn't catch momentum.  I think that the 430 to 790 move was the pump and it is over. 

In other news, I'm making a killing on PredictIt.  Also - did I ever mention that I partially wrote an arbitrage trading program for the Iowa Electronic Market back in 1996?  I didn't complete it due to the limitations of the scripting language (I was using a modem scripting language to screen scrape data that I got from Telnet) and the lack of financial reward (I only had $20 invested).  It was on my 486 pc with windows 3.1 and a 2400 baud modem - so it would have crashed a lot too.

I recently found this interesting article on algorithmic trading in the Iowa Electronic Markets (the author wasn't aware of any trading programs existing in the market until 2000).  It is of general interest if you ever want to trade/gamble on a prediction market - and Bitcoin has several of them! 
http://poseidon01.ssrn.com/delivery.php?ID=382022091086006005109073096118110027029011095077058037071002071109067127104092068024048096036099043030006118121015106077079089040066043048077004069081067080107087092008007076009018064029102001122004084088072119005098095085099094000031005068116111119120&EXT=pdf

[nrd525]

Apparently bitbet.us is under receivership.  It sure doesn't say it on the website!

http://fr.anco.is/2016/bitbet-receivership-first-progress-report

See my advice on not investing in any business that issues shares in bitcoins. I'll extend this to recommend staying away from any business affiliated with Mircea Porpescu.

[nrd525]

Great article:
http://www.coindesk.com/bitcoin-the-trust-anchor-in-a-sea-of-blockchains/

[nrd525]

I wonder if the Ether hard fork and the persistence of ETH classic is behind the recent BTC decline?  I haven't seen a good article on it, but it sounds like you have problems with an unintended hard fork and there might be opportunities for hackers and/or double spending?

[nrd525]

Bitfinex got hacked (and BTC is down to $560).

So far, I looked at my BitGo wallet which BFX made me setup. But because I haven't done any margin trading (or exchanging) with BFX since I set it up - it has 0 BTC in it (and hasn't lost any).  My bitcoins are in the BFX Deposit Wallet.  So I don't know if they are affected.

The general panic surrounding this is a good time to buy if you are looking for a long term position.

Also, BTC lending rates are up to 0.12%/day at Poloniex.  Though you might want to wait for the BFX hack to be resolved, in case it is a type of hack that could apply to other exchanges.

[nrd525]

The Bitfinex hack looks bad for Bitfinex users (possibly 125k BTC lost according to a transfer of 125k BTC out of multi-sig wallets -- see Reddit for analysis).  But I really am not sure that it should be causing such a large decline in the overall price.

535

For BFX, I'm not sure how soon they can reopen the website as they have to assign losses.  If it was a small hack, they'd bail people out. They might even be able to bail out 10k BTC (eg $6 million).  But the hack is too big. At first I'm guessing they will assign the losses to the people whose accounts were hacked (so BTC accounts that were linked to BitGo). But they might need to consult with lawyers as it could be that BFX itself is responsible, and thus they should liquidate their assets and distribute them equally.

If I wasn't at risk of losing a large percent of my investment funds, I'd be considering buying Bitcoins at this price - and maybe placing orders in the upper 400s.  However, I unfortunately have a large US balance on BFX (30,000) and medium sized BTC one (20 btc).

[nrd525]

That spike down to 465 is likely the bottom of this BFX hack related market decline, unless there is another wave of bad news (like other exchanges being affected, or the loss being bigger than expected).

BFX is likely going to the liquidators and everyone will take a (guess) 20% loss.  Unfortunately this could take years.  The only way I see this not happening is if the loss is less than 10% of their assets (which would be true if their assets are as big as MtGox which had 800k BTC, but I'm guessing that Bitfinex has much less than that - as you don't see the massive trading walls that you used to see on MtGox.  And bitcoin trading and use is spread out to a lot more places.)

I wish there was some way to bail out the site that would avoid liquidators.  There is also a small chance that someone will buy the company.

[Hunyadi]

When there was ETH-fork, ETH swap providers didn't get any ETC because they didn't have any ETH balance during the fork. Now if we follow the same logic and you did lend your whole balance (I had all my USD, BTC, ETH and ETC lent out, which I had there) it's up to borrowers solvency whether he/she can pay back or not. However, if their margin was BTC...

I don't know. I hope Bitfinex won't screw lenders once again...though I think they will. Anyways, it might take years to get anything back.

[nrd525]

That's an interesting argument about how cascading losses from the people who lost their BTC could affect swap lenders.

On the other hand, if the BTC price stays at 550+ the people who are long BTC shouldn't be that much underwater.  At this rate the price might even recover to 600 and hold it.

Fortunately most of my assets are fixed (I own half a house) and not subject to my crazy trading/investing ideas. But beyond that, if I lose access to my BFX funds it will mean that my largest accessible investment is now in PredictIt (a political prediction market - for "research" purposes).  Somehow I'm up 330% since February (which would be even more if they didn't take a 10% cut of all your profits).  So that is pretty hilarious in a gallows humor kind of way.  One of the sillier things to happen on PredictIt was during the RNC convention when there were three price surges for Bush winning the nomination.  I think at least one of them was after Trump had won the nomination.  Someone was wasting a couple hundred dollars just to bid Bush up to a 10% chance of winning (while also ignoring the better priced option of taking Trump NO at 3%).

[nrd525]

I wrote this on reddit:
https://www.reddit.com/r/Bitcoin/comments/4wh8ah/bitfinex_subsidizing_longs_at_other_users_expense/

If Bitfinex goes ahead with settling positions at above market prices for BTC long positions, then they are subsidizing these positions.
If they settle BTC positions at 604, instead of the current market price (585), then they are subsidizing these positions. If they do this with their own personal funds then that is ok, but if they are using corporate assets how can they legally justify favoring one class of creditor over another?

They are taking money from other users to subsidize the speculators, and we are paying for it with an increased haircut.

...
Please upvote the reddit post. Unless I'm wrong, in which case please let me know why I'm wrong.


...
The proposed 36% haircut is bad.  I guess I'm glad it isn't worse and that they mostly generalized the loss.  Why "mostly"?  Because they are bailing out the longs.  How would they even close these positions? Normally they'd market sell the BTC on their own exchange. Instead, the BTC were probably stolen.  So they cannot even sell them on another exchange.  But in any case, when they closed the positions they had to get the money from somewhere.

[nrd525]

I'm very curious. Is Bitfinex, while expecting major losses, allowed to do paper settlements of the open positions?

It is a very grey area.  One potential major problem - what if they have employees who have long positions and who end up benefiting from this paper settlement and an advantageous BTC price?

[nrd525]

The proposed BFX hair cut of 36% will wipe out 80% of my bitcoin long term profits, and possibly leave me in negative territory after taking into account taxes.  Unless the proposed BFX tokens turn into a repayment plan that works.  I think there is a chance that they will at least partially repay the loss (otherwise issuing worthless tokens is silly).  Paradoxically, if BFX comes back online, their swap rates will probably be a lot higher - which will allow me to earn back a 36% loss faster (Yes, I am stupid enough to continue to use the exchange).

It will be interesting to see if people still lend out BTC for 1% APR. I've always thought that was crazy low.  USD rates of 10%/year just proved to be a bad risk.  Though if you've been lending USD since near the beginning you are probably still up 100-200%.

[adamstgBit]

The proposed BFX hair cut of 36% will wipe out 80% of my bitcoin long term profits, and possibly leave me in negative territory after taking into account taxes.  Unless the proposed BFX tokens turn into a repayment plan that works.  I think there is a chance that they will at least partially repay the loss (otherwise issuing worthless tokens is silly).  

sorry for your loss.
i think the BFX tokens will probably give you some added value, but it probably will not be worth enough to cover your loss fully.
I guess it depends on how that token is structured, if the token represents a dividend paying share for the company... i guess it would have a chance at repaying you in full and then some, IF bitfinex gets there act together and keep making profits....

Paradoxically, if BFX comes back online, their swap rates will probably be a lot higher - which will allow me to earn back a 36% loss faster (Yes, I am stupid enough to continue to use the exchange).

It will be interesting to see if people still lend out BTC for 1% APR. I've always thought that was crazy low.  USD rates of 10%/year just proved to be a bad risk.  Though if you've been lending USD since near the beginning you are probably still up 100-200%.

i think your right the rates will be much much higher, at least for the first few weeks/months after they re-open.

[RyNinDaCleM]

This whole BFX thing is a joke. BFX tokens, as I understand, are worth $1 right now. BUT, they will allow trading of them, which to me is a terrible idea from a customer satisfaction PoV,and just brilliant from a business PoV. First large token holder to log on dumps it to $0. Now BFX "Buys the dip" and negates a fair chunk of what they owe. In the mean time, everyone else's BFXbux are devalued to the point that most will never get anywhere close to what was lost, and BFX only pays a fraction of what was owed to "make complete" all the accounts. The whole thing sounds like a scam to me. I like that they are making an attempt, I guess... But they are going about it the wrong way. The icing on the BFGOX cake is that as volume leaves the exchange like the walk of shame after a roofie colada induced date rape, it has a negative feedback loop on the likelihood of ever getting paid back.

[adamstgBit]

This whole BFX thing is a joke. BFX tokens, as I understand, are worth $1 right now. BUT, they will allow trading of them, which to me is a terrible idea from a customer satisfaction PoV,and just brilliant from a business PoV. First large token holder to log on dumps it to $0. Now BFX "Buys the dip" and negates a fair chunk of what they owe. In the mean time, everyone else's BFXbux are devalued to the point that most will never get anywhere close to what was lost, and BFX only pays a fraction of what was owed to "make complete" all the accounts. The whole thing sounds like a scam to me. I like that they are making an attempt, I guess... But they are going about it the wrong way. The icing on the BFGOX cake is that as volume leaves the exchange like the walk of shame after a roofie colada induced date rape, it has a negative feedback loop on the likelihood of ever getting paid back.

lol, well if BFX tokens drop to 0 i'm for sure buying that shit!

[nrd525]

The BFX tokens are very strange.  The price is relatively stable at around 32-42 cents even though there is almost no information as to BFX financials.  Given the fact that they haven't fallen anywhere close to zero, and that Bitfinex is hinting that they want to eventually redeem them - I'm relatively positive.  But I'd also probably sell them all for 60 cents if I could.

The USD swap rate is also very low (0.03%). It might recover as demand picks up (and currently US traders aren't allowed to use margin).  Or it could be that lenders are expecting an increase, waiting it out, and by doing so are maintaining a high supply and causing low rates.

There are also two sides to the swap risk.  Both the lender and the borrower have perceived increased levels of risk - so even if you can get swap at 0.03%, your actual risk might be closer 0.1% - and this will depress demand and swap rates.  Though in practice, I haven't seen demand decrease for swap until it hits 0.2%/day.  It's more likely that we're seeing the impact of the bear market and loss of US margin traders.

I think Bitfinex will succeed in gradually restoring confidence.  Though if they don't soon come up with an explanatory email about what caused the hack, they will set themselves back a lot.

[kobilica]

BFX token will have no margin/leverage trading enabled.