nrd525 Market Tracker

[Samarkand]

Interesting and some people might go that route.  It's also possible that BFX USD swap rates are going to go very low (eg 5-7% APR). There is definitely a major source or two of new funds which is able to add several million per day without a problem, and if the bull market turns into a bear market the rates will go very low.  Especially if BFX can use its equity to back up any future hacks or thefts.  How much BFX equity did the company retain?

I think it was to be expected that swap rates will go down in the long-term. It is probably just a result of a more mature market environment
for BTC trading in general. I strongly suspect that the BFX rates will reach a level, which is not much higher than the rates you pay for margin trading
at traditional fiat brokers (e.g. Schwab or Interactive Brokers in the US). If you are right regarding the new sources of funds, this could of course
speed up this process even more.

In other words, it was fun while it lasted 

[nrd525]

Placed some small sell orders starting at around 4400 (every $100 on the way up).  Of course then the price fell to 3830 and recovered so far to 4070.

It looks like we're in a bull cycle that lacks historical precedent.  BTC has had large bull runs before, but never with such large market cap.  As such it is very hard to predict anything.  I didn't expect it to be so strong and so soon.  It is very paradoxical that the creation of alt-coins and ICOs may be increasing the value of BTC - as I would have expected competition to limit the value. 

It is also possible that I'm wrong in thinking that the alt-coins are in a bubble (though it'd be harder to argue the same for the ICOs), and that instead the community/developers/etc are creating a new economic ecosystem that has value.

There are some general market rules that probably apply. Notably the faster it goes up, the faster and deeper it goes down.

[nrd525]

Transaction fees are increasing dramatically. If Lightning Network isn't ready for operation (is it?) and we don't double the block size until November - this could get very painful.

https://bitinfocharts.com/comparison/bitcoin-transactionfees.html

By contrast Ethereum fees are lower - so even though there are complaints about problems with ICOs and it be hard to run distributed aps due to the high cost of 'gas' (loosely related to transactions/processing power), the fees are still much lower than Bitcoin. Partially due to having larger blocks.
https://bitinfocharts.com/comparison/ethereum-median_transaction_fee.html

[nrd525]

Looks like volatility is going up. Even though we're getting Segregated Witness locked-in (Aug 24), it looks like the debate over the NYA (New York Agreement for Segwit and then doubling block size) is heating up.

Without replay protection, it will be a straight fight between 2x and the regular chain in November (and whichever chain has the most hash power will win - though it may up to two weeks to settle down).  That could be very messy, though there is also a history of last minute agreements and people systematically overestimating the importance of good or bad news in Bitcoin.

I wish it was possible to keep transaction fees at $1-$5 (or less of course) - so people like me can send test small transactions (ex. for splitting Bitcoin and Bitcoin Cash), but I'm skeptical that any solution will last longer than the next 2-3 years.  Even with big blocks, we'd probably need exponential growth in the block size which isn't going to be sustainable. We might end up having to use alt-coins for small transactions, and/or a centralized system (that is perhaps tied into bitcoin).  I especially don't think micro transactions (say $.01) are going to work without a centralized system.

[nrd525]

I think the SEC will follow suite and crackdown on ICOs:
https://www.coindesk.com/canadian-regulators-many-ico-tokens-meet-securities-definition/

Also - RRT (Bitfinex recovery token) is up from 7 cents to a high 44, and current 25.  The only information that I found was a deleted Reddit post claiming the hackers are returning the money. So that is suspicious.

[nrd525]

China ICO ban might be real:

https://www.youtube.com/watch?v=MD3P935-J_A

Markets down a lot. Bitcoin was already down at least 10% before this happened and now down 20%.  I sold small amounts all the way up to 4930 (and then removed my higher offers because I'm planning to hold 1+ year to reduce my US capital gains tax rate - and I was ruining my investment term by getting BTC swap interest).

If other countries get on board, this could be the beginning of the end of the ICO bubble.

[nrd525]

GDAX/Coinbase is currently trading with a 7-8% premium over Bitfinex on BTC and LTC.

Also S. Korea bans ICOs.

[Samarkand]

GDAX/Coinbase is currently trading with a 7-8% premium over Bitfinex on BTC and LTC.

Also S. Korea bans ICOs.

What is your opinion on the whole Tether / Bitfinex rumours?

In the last 3 days, 70 million $ worth of USDT has been issued:
http://omnichest.info/lookupadd.aspx?address=3MbYQMMmSkC3AgWkj9FMo5LsPTW1zBTwXL

If this money is not backed by real money (as the rumours suggest) this could have devastating effects for
the whole crypto market. Is there some merit to these rumours in your opinion or is this some
elaborate FUD?

Additionally, I´m really surprised that Ethereum is still above 290 $. ICOs are basically the whole
value proposition of ETH as of now and the China and South Korea News should have plummeted
the ETH exchange rate much more.

[nrd525]

I suspect the Tether rumors are coming from people who dislike Bitfinex.  Previously there were rumors/FUD about them still using the Bitcoinica code - when in fact I think they stopped using it in 2013.

I suspect some people are very angry about the Bitfinex hack. They sold for 25 cents on the dollar and are upset that we haven't even had a good report on it, whereas other people who held on got reimbursed fully (and the stock is now worth $2?)

I think it is in Bitfinex's long term self interest to be honest.  They are making a ton of money and don't need to cook the books.

Conspiracy theorists often like to come up with complex explanations for things that are simple.  For instance look at people who try to explain that ponzi schemes could actually be making 1%/day running a real business.  In this case, it is easy for an exchange to add money to their database without it being backed by anything.  MtGox probably did this. So why use Tether?

[nrd525]

I'm surprised by how healthy the bounce is.  It might even be too healthy and indicate that we're still in a rampant bull market.

While we can survive without China ICOs, I think the larger crackdown is coming from the US and others. It could take a year, but eventually it should have a big impact - especially on Ether and the ICO tokens.

[Samarkand]

I suspect the Tether rumors are coming from people who dislike Bitfinex.  Previously there were rumors/FUD about them still using the Bitcoinica code - when in fact I think they stopped using it in 2013.

I suspect some people are very angry about the Bitfinex hack. They sold for 25 cents on the dollar and are upset that we haven't even had a good report on it, whereas other people who held on got reimbursed fully (and the stock is now worth $2?)

I think it is in Bitfinex's long term self interest to be honest.  They are making a ton of money and don't need to cook the books.

Conspiracy theorists often like to come up with complex explanations for things that are simple.  For instance look at people who try to explain that ponzi schemes could actually be making 1%/day running a real business.  In this case, it is easy for an exchange to add money to their database without it being backed by anything.  MtGox probably did this. So why use Tether?

Thank you for your detailed reply.
I tend to agree with you on all of this.

However, I have a follow-up question, which was also part of the rumors. Let´s assume you are an institutional investor based in Asia with an aim
to invest 20 million $ in the crypto markets.
Why would you buy Tether and send them to Bitfinex or one of the other exchanges that has USDT trading pairs when you can skip
Tether and simply wire your funds directly to one of the many exchanges that has working banking relationships?
Using Bank -> Tether -> Exchange seems to be a lot more dangerous due to increased counterparty risk compared to using
Bank -> Exchange.

Besides, it is interesting to see that the Tether supply (according to the official Tether homepage) never decreased - all it has ever done is go
up historically. If Tether was indeed a legit operation you would assume that sometimes people cash out their Tether and therefore
decrease the total supply of Tethers. But this never happened.

[nrd525]

The Bitfinex trading system might be better than the others (less downtime, faster response, better UI).   Bitfinex has a pretty long and decent track record.  BFX sometimes has lower prices than other exchanges (and sometimes higher).

That said, I haven't researched the details about the Tether debate. I'd love to see two smart people debate it on Youtube (with evidence).

It does make sense that the Tether USD balance sheet should sometimes shrink.  Though if they are averaging it over time, it could go straight up.  For instance, BFX USD swap has been going straight up if you use a weekly average I think.

[nrd525]

BTC down to 3250 (down 34% from peak) as BTCC says it will close on Sept 30 for Chinese traders.

https://www.coindesk.com/btcc-to-cease-china-trading-as-media-warns-closures-could-continue/


BoxMining has good insight into China.  Thinks the ban might be temporary:
https://www.youtube.com/watch?v=td-sqHRKBUY

I'm prepared to arbitrage BFX / GDAX, but so far there is only a $10-$30 difference.

[nrd525]

As Chinese traders wake up - BTC 3300 in the USD markets, but only 2900 in China.

[Samarkand]

What is your opinion regarding the relaunched BTC-E?

https://wex.nz/news/1

Currently the crypto prices are inflated compared to all other exchanges, which creates a tremendous
arbitrage opportunity - if you are actually able to get funds out of Wex. Roughly 15-20 % are possible
at the moment depending on the crypto and the particular exchange you use for the other side of the trade.

Besides, it could be a potentially profitable move to buy some of the issued tokens. After all these exchanges
make a fortune, so I´d expect them to eventually reimburse everybody.

[nrd525]

I don't know details, but I'd stay far away from BTC-E or any successors.

I should have stayed up last night and arbitraged BFX/Gdax as there was a 2-3.5% gap!  Of course after the biggest gap, the price fell - so that would have been bad.  But there was a good window of opportunity after the price had fallen.  I almost had most of my funds out of swap lending too as I was hoping for an arbitrage opportunity that would exceed the value of swap lending.  But 2 days ago, I put most of the money back into swaps.

The last major arbitrage (BFX/GDAX) opportunity was on Labor Day in the US.  I wonder if they are correlated with days that don't have bank wires or if major traders/arbitragers are taking off holidays?  This last opportunity was a Friday night (in the US), so I'm hoping we'll see another one this weekend.

While BFX doesn't get international wires itself, it might get it indirectly via Tether?  I don't know.

You also need big price movements for arbitrage opportunities.

Maybe the professional arbitragers are most focused on the USD/China difference.  Currently a $600 gap which would make it worthwhile for even me to fly to China with a bag of cash if I could pull it off.

[Samarkand]

...

Maybe the professional arbitragers are most focused on the USD/China difference.  Currently a $600 gap which would make it worthwhile for even me to fly to China with a bag of cash if I could pull it off.

Yes, the USD/China difference is probably the biggest arbitrage opportunity right now, if you have an already verified
Chinese exchange account at your disposal (otherwise it is probably not possible to verify an account right now with
the upcoming shutdowns) or have some other way of buying BTC in China.

Are you only arbitraging GDAX and BFX when the opportunity arises?

Interestingly, the gap between BFX and an exchange from Brazil (Mercado Bitcoin) is even bigger than the gap between USD/China
(in the other direction, therefore you wouldn´t even need to bring a bag of cash).

[nrd525]

I tried arbitraging GDAX and BFX again.  I recalculated that I need around a 1.01% or greater difference to make up for the fees.  So there was a 1.5% gap which then narrowed to 0.2% within 12-20 hours and I was able to send my money back to BFX.

However, when sending the money back I got caught with a 4 hour delay at GDAX.  I can see why people complain.   GDAX says "Completed" on the withdrawal even if they haven't started to send it on the blockchain. They also do not let you cancel a withdrawal. They also have an estimated time which is a lie (they were using the current time - and it was the same for my current withdrawal as for one that I did 10 days ago).

I was a bit worried that I might have lost the coins!

Fortunately during this delay the price went up 5% =)

I don't know anything about Mercado. There are a lot of tiny exchanges that have larger arbitrage gaps, but you'd need to setup an account which is probably hard if you aren't a resident of the country.  It is extremely unlikely that there would be an easy way to make more than a 1-5% profit doing arbitrage. Larger players may have some advantages with lower fees from the exchanges and also if they use international wires (which are an absolute cost).  On the other hand, they have increased slippage.

[nrd525]

With this healthy bounce back to 4100 (currently), I'm thinking that we're back in bull mode and it's going to take a major event like the SEC acting against ICOs, or the upcoming November 2x hard fork (especially if it comes without replay protection) to drag down the crypto markets.

[nrd525]

South Korea bans ICOs.

Bitfinex has 175 million in USD swaps.  When I started lending it was only 500k (April 2013).  And $35 million unused swaps most offered at 0.043%/day.  Now perhaps only 75% is being used to long BTC, but this is still a ton.

I watched a recent Tone Vays video and he, who is normally very bullish, was saying that the mempool is now very low and that it might have been spammed all this time by big blockers (or others) - and thus the fundamental of how many people use bitcoin is vastly over-stated.  He is much more of a technical analysis person, but he implied that we had greatly overshot the fundamentals!

So far the Bitcoin Gold hard fork hasn't much attention, outside of a couple YouTubers.  That is coming up before the November hard fork I think.