nrd525 Market Tracker

[nrd525]

1) Ransomware demanded Bitcoins
2) It was temporarily stopped by someone registering a long random domain name.

https://www.theguardian.com/technology/2017/may/13/accidental-hero-finds-kill-switch-to-stop-spread-of-ransomware-cyber-attack

Might be related to the 12%-15% fall yesterday.  Or not related as I expect to have increasingly large drops in the price as we approach the peak of this bullish/bubblish cycle.

[nrd525]

I've had a long standing theory that BFX USD swap rates were capped at around 0.07%/day (I think that is the number?) by one or more large lenders who could increase USD supply at a very fast rate.   The fact that they kept rates relatively high was either due to their own opinion of risk (which turned out to be accurate if true - as this was before BFX was hacked), or due to an arrangement with BFX - perhaps a gentleman's agreement, not to completely drive out all the other swap lenders by not flooding the market with supply.  If they'd have flooded the supply, the rates could possibly fall to 0.02%/day.  Or maybe they were maximizing their own profit by keeping rates medium-high.

However, now that fiat transfers to BFX are more difficult - it is possible that this large lender will not put additional funds into Bitfinex in a timely manner. Previously it only took 1-2 days for funds to be added after a lending rate spike.

We may see this proposition tested as for the past 1-2 days the USD swap rates have spiked to 0.19%/day!

On the other hand, we won't know whether it was a large actor or a bunch of unrelated small actors as both parties have a harder time putting funds on the site.  In either case, I'd expect greater volatility in BFX swap rates - dampened by the fact that there appears to be an arbitrage channel in operation as the BTC premium has fallen from a peak of $100 to only $0-$40.  Currently the BTC price at BFX and Coinbase are tracking nicely.

[nrd525]

Bitfinex premium is back. $60 over Coinbase. So while BFX hit another ATH, the other USD markets aren't reacting as strongly.

[nrd525]

BFX touched $2000!  And OkCoin hit 12000 ($1750 USD).

BFX swap rates show some signs of going super high (aka the max of 0.75%/day), but nothing proven yet.  It'd be interesting if they go above that and people are forced to close positions. But probably enough people have long term loans (30 days) that it won't be a big deal.

[nrd525]

This graph of total crypto market cap is pretty bubbly.  Especially the alt-coins.
http://coinmarketcap.com/charts/

[nrd525]

Revised recommendations (rewrite of the original post #2)
1) Medium risk - loan swap USD at Bitfinex at the flash return rate.  Expected 10-20% APR.  The current APR is much higher (0.15%/day. There is a chance you will lose all the money - but the chance is worth it.  My risk assessment of Bitfinex is that they are more reliable than most other bitcoin corporations.

2) High risk - go long on Bitcoin.  Hold for two years or more (previously one year, but at these high prices I think you'll want to be prepared to hold for 2+ years).  Do not day trade.  If you are starting at zero investment in BTC, you might want to cost-average the buy-in over six months.


Dropped Negative Recommendations
Do not loan BTC at Bitfinex.   2% APR is not worth the risk. (New recommendation: the rate is regularly hitting 0.05%-0.08%/day - and that risk is worth it).
 
Do not invest in altcoins.  Bitcoin is 90% of the market and shows signs of a natural monopoly due to the network effect.  (New recommendation: it looks like crypto currency has got so large that there is room for multiple crypto currencies. That said, I'm extremely skeptical about the current value of alt-coins - maybe preparing to buy on a 80-90% extended bear market / dip is a good idea, but I also haven't researched them enough to know which ones are the best value.)


Continued negative recommendations
Do not invest in mining. I'm very unqualified to evaluate this, but it looks like mining is now a game for big organizations with experience, cheap labor, and cheap electricity. Be extra skeptical of any proposal for "cloud mining".  Investing in mining is effectively trading bitcoins on the margin (which I am also very skeptical about doing).

Do not invest in any business that offers shares for bitcoins.

[Hunyadi]

Do not invest in any business that offers shares for bitcoins.

I guess you don't like ICOs?

[nrd525]

Bitfinex price hits 2220 (note the triple "2").  I was thinking it might hit 2222 on Tuesday =)

BFX USD swaps are up $5 million in the past 24 hours (possibly a record?) to a ATH of $52.6 million.  So probably a whale lender.  We'll see how fast the rates fall (might not happen if we continue going up 10%/week).  I wonder if the whale lender is Bitfinex itself?  They could be lending out their extra funds - and they're probably making a killer profit with the current bull market.

Coinbase has a $80 premium over Bitfinex (and other USD markets). That's a sign of super bullish/bubblish sentiment.

[nrd525]

The BFX 2220 ATH was replaced by a 2222.2 ATH.

We might be getting near the end of the bubble. I'd expect a sharp spike/acceleration upwards - maybe 15% (averaged over at least three major exchanges) in a 24 hour period.  Followed by a medium term (possibly long term) bear market that involves a series of faster spikes downwards.  There will be fake recoveries, but we could get into a bear market for anywhere from 6 months to 2 years.

Or we could implement Lightning Network (and Segwit) and if it alleviates the transaction problem that could be enough to sustain higher values.  Though currently it looks like we're still a long way (6 months to 2-3 years) from that happening.

[nrd525]

If Bitfinex adds Dogecoin, get ready for a general crash.

[nrd525]

I'm getting ready to sell part of my bitcoins. I probably won't actually do it. But if the price spikes to, say $3000, it is good to be in a position where you can sell some of them. So I'm stopping my renewals of BTC swap lending.  That said, it is mostly locked in for 7 days - so I'm hoping the price spike (and end of the rally) doesn't come before then.

[nrd525]

BFX USD swap rates are up to 0.4%/day.

 I've stopped renewing it and lending it out, so I can use it to do a margin-short (and effectively sell part of my BTC), but it is very tempting to just lend it out.  Looks like they are running out of swap funds.  These high rates might be causing the negative BFX BTC premium, as people are transferring BTC in and selling them to get the 0.2%+ per day.  BFX is currently $50 (or 2%) below Bitstamp and Coinbase.

[nrd525]

Sold 1.33 BTC for $2440 to $2490.

[nrd525]

The price rate of increase (log chart of course) continues to increase.  The dips are deeper and especially steeper The last dip was $496 on Bitstamp (or 18%),  $440 on Bitfinex (16.4%), $504 on BTCe (18.4%) and 12.5% on Okcoin (Yuan).  Of course the dip might not be over in which case it would be less steep.

By contrast the last dip on May 22 was around 10-11%. And the May 12 dip was around 12%.

I watched some youtube videos about ICOs - total bubble which might fall 80-95%.  Notably, the SEC is going to go ballistic and shut down / regulate the ICOs (my completely non-professional opinion, but they shut down all the previous BTC stock exchanges and this time it will be faster because the stakes are much higher).  Though I'm surprised they haven't taken on the DAO yet. They might be slow to act.

Apparently Coinbase and GDax are having trouble with up-time.  I was thinking about transferring BTC to sell on those sites (as the premium was up to 6% over BFX ten hours ago), but maybe it isn't a good idea. Also my BTC is still locked up for 4-7 days in swaps.

We might have one more push in us, in which case we'll be pushing for possibly $3000.   (We might also have two pushes or already be at the top).

[nrd525]

Hmm, just realized I cannot margin trade on Bitfinex as I'm US.   It isn't really margin trading if I'm just selling my own BTC several days before I get them back from lenders.  I wonder if the SEC would let them do that?  Or maybe it isn't worth implementing.

But I can margin trade on GDAX.  There is a 10k limit, but that is ok with me.  Has anyone tried this?

Edit: I cannot margin trade on GDAX, need to be an investor with $5 million. That isn't happening.

[nrd525]

As the BTC price is falling by the minute (2030 on BFX), I'm pretty sure that we reached the peak.  Now it's a bear market.  And if we don't activate SegWit or get an ETF it could be a slow(ish) drag down to $1000 or worse.

I was just thinking around 11 hours ago, that I'd be pretty happy to sell up to half my BTC (at $2450 on BFX or $2600 on Coinbase) if they weren't locked up in the swaps for another 4 days.

[nrd525]

Great commentary on the BFX premium:
https://www.reddit.com/r/BitcoinMarkets/comments/6dfnsr/why_bitfinex_went_from_a_premium_in_its_cryptousd/

[Samarkand]

Nice thread, I really like your insights.

However I was wondering why you are still recommending BFX as the exchange of choice.
I lost a lot of trust in them last year during the hack and am surprised how they have managed
to keep their position as one of the high-volume exchanges.

What makes you so confident that it´s still a good idea to lend out funds at BFX?
I admit that the rates are very attractive, but as I mentioned I´m lacking the trust
I once had in BFX before the events of 2016.

Regarding the BTC price I sold all my holdings at roughly 2300 with the intention to buy in the 1300-1400 $ / BTC
range. If this works out this will lead to a big increase in my BTC holdings.
I see that you are thinking of employing a similar strategy.

[nrd525]

I don't think BFX is the best exchange for trading, I just trust them more than Poloniex. I think lending out swap is risky, but worth the risk in the long run (2+ years).

I wanted to sell around half my holdings, but they were locked up so I only sold that 1.3 BTC.

It looks like we are in a bear market.  $2700 was the top.  I'm certain that it won't get as low as last time, so we should definitely stay above $200 and probably $500.  But other than that, speculators love a good bear market almost as much as a bull one.  I might be very scared/scarred from the 2014-2015 bear market.  But I think most people will refer to that, in which case we'll have lots of opportunities for it to appear to stabilize as we beat our way down to unexpected lows.

If you like risk, try shorting all the major alt-coins.

[nrd525]

Sold 1.4 BTC on GDAX at 2280.