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Author Topic: TH1BTC Speculation Thread - Bitfinex Cloud Mining Contract  (Read 14207 times)
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nrd525 (OP)
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September 29, 2014, 06:59:20 PM
Last edit: October 15, 2014, 06:55:54 PM by nrd525
 #1

This thread is for the discussion of the value of TH1BTC mining contract on Bitfinex that lets you buy 1 THs of mining power that expires on Dec 15, 2014.  They launched the contract on Sept 15, 2014 with 100 contracts and have since added shares.

Description of the Asset:
https://www.bitfinex.com/pages/mining_stats

Current number of shares: 600.

Order Book:
http://bfxdata.com/orderbooks/th1btc.php

BitcoinWisdom Difficulty tracker and prediction:
https://bitcoinwisdom.com/bitcoin/difficulty

BitcoinWisdom Mining Calculator:
https://bitcoinwisdom.com/bitcoin/calculator

Coinplorer difficult prediction:
https://coinplorer.com/Charts/Difficulty/BTC

Another Bitcoin Difficulty graph set:
http://bitcoin.sipa.be

CryptAnalysis Bitcoin Difficulty Predictor:
https://cryptanalys.is/difficulty/bitcoin_btc.php

BitBet "Difficulty over 41 billion by November":
http://bitbet.us/bet/1050/btc-difficulty-over-41bn-before-november/

Another Bitcoin Mining Profit/Loss Calculator:
http://aleks1k.github.io/bitcoin-calculator/

Havelock Bitcoin Difficulty Derivative:
https://bitcointalk.org/index.php?topic=430137.0
https://www.havelockinvestments.com/fund.php?symbol=B.MINE

Similar Mining Contracts
-Cex.io -GHS: https://bitcoinwisdom.com/markets/cexio/ghsbtc - very expensive
-Cointerra - http://mining.cointerra.com/shop/ - as low as $999/THs - but delivery in Q1 2015
-Hashnet - https://hashnest.com - very high maintenance fees
Note: there are a lot of mining contracts and companies that claim to be producing miners which aren't trustworthy or will fail to deliver on schedule.

List of TH1BTC trades (only includes recent trades)
https://api.bitfinex.com/v1/trades/th1btc

BFXData
Order Book: http://www.bfxdata.com/orderbooks/th1btc.php
Swaps: http://bfxdata.com/swapstats/th1.php
Self-moderated: I will delete off-topic posts.

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September 29, 2014, 07:08:22 PM
Last edit: September 29, 2014, 07:52:38 PM by nrd525
 #2

My previous thread about how the TH1 contract gains value from the ability to short it:
https://bitcointalk.org/index.php?topic=794060.0


I'm shorting this asset. I think it is grossly overpriced and will only mine around 0.85-0.95 BTC.  It does get extra value from your ability to lend it out, however I think that value will decline as the contract value declines and as Bitfinex issues more shares.  Though Bitfinex hasn't issued more shares in several days - so it is possible that they have changed their policy.

It is very puzzling that the value of TH1 has increased over the past seven days as during that time it should have mined and lost 10% of its value.

The TH1 mining contract has been mining "lucky". It has mined more shares than it would be expected to do so given its hash rate and the difficulty.  This combined with the decline in the BTC price (which will cause some miners to shutdown) may explain part of the increase in TH1 value.  But I would think that it would slow the decline in value, rather than actually increase the TH1 price.

It looks like GHS at Cex.io has also increased in price over the past seven days. Over the past seven days Cex.io had 2200 (BTC) volume for GHS, whereas Bitfinex had 470 TH  (or around 600 BTC) volume.  So the GHS contract might be dominating the market. That said, it is a permanent contract (assuming they don't increase the fees to the point of killing it off) whereas TH1 loses all of its value in 77 days.

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September 29, 2014, 08:26:06 PM
 #3

Very interesting, thanks for the post; I'll have to look into it.

Though CEX isn't short-able, my main issue with doing so would be that (like you said), CEX a permanent contract - if buyers keep the pricing high despite dwindling payouts, you could be right and still see a loss.
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September 29, 2014, 08:46:03 PM
 #4

Well, Im shorting aswell

It does get extra value from your ability to lend it out, however I think that value will decline as the contract value declines and as Bitfinex issues more shares.

Agree, but there is a risk that contract value will decline sharply before expiration and will be somewhat inflated up to that point, thus driving up the swap rates and swap costs for shorters. Also Bitfinex issuing more shares at will is not how such things should be done, because it affects greatly the demand/supply ratio and therefore price. Its very unprofessional of them.

The TH1 mining contract has been mining "lucky".

Another "shady" part of this contract (in addition to sporadical increase in number of shares) is how these mining profits are calculated. If you will lookup these mined blocks you will see that they are mined by a far greater pool than it is stated, and for the TH1 contract only some blocks are selected, again we dont know the mechanism of such selection.

Im short at the moment, but dont expect the price to decrease any time soon.

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September 29, 2014, 08:53:40 PM
 #5

That's true. The TH1 mining should  get a 1/3500th of the reward for mining the larger number of blocks that are mined by the larger pool (of 3500 THs), but instead they're getting a 1/400th share of each block that is mined by the Bitfinex sub-pool (400 Ths).

It is shady and increases variation.

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September 29, 2014, 09:12:28 PM
 #6

Not really, let me explain:

Last payout ATM:
September 29, 2014 - 09:00:11 AM CEST    323050    3,544.34    400    25.023    2.82404547
Pool of 3500 THs recieved 25.023, TH1 share of it is 2.82404547 (as in 400/3500). So it is pretty fair.

I was referring to blocks mined by a pool (you can lookup by IP on blockchain) and that there was a much larger pool that mined like 10 blocks and only 3 of them were selected to count towards TH1. As I am writing this pool for TH1 has been changed and now its IP shows only proper TH1 blocks (323050, 322980 and 322955).

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September 29, 2014, 10:13:02 PM
 #7

Oops my mistake. Thanks for the clarification.

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September 30, 2014, 02:05:03 AM
 #8

Next difficulty increase might be zero.

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September 30, 2014, 02:40:06 AM
 #9

Interesting.

I can definitely see this security making someone money. I just need to figure out how to be that person.
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September 30, 2014, 02:49:35 AM
 #10

My previous thread about how the TH1 contract gains value from the ability to short it:
https://bitcointalk.org/index.php?topic=794060.0


I'm shorting this asset. I think it is grossly overpriced and will only mine around 0.85-0.95 BTC.  It does get extra value from your ability to lend it out, however I think that value will decline as the contract value declines and as Bitfinex issues more shares.  Though Bitfinex hasn't issued more shares in several days - so it is possible that they have changed their policy.

It is very puzzling that the value of TH1 has increased over the past seven days as during that time it should have mined and lost 10% of its value.

The TH1 mining contract has been mining "lucky". It has mined more shares than it would be expected to do so given its hash rate and the difficulty.  This combined with the decline in the BTC price (which will cause some miners to shutdown) may explain part of the increase in TH1 value.  But I would think that it would slow the decline in value, rather than actually increase the TH1 price.

It looks like GHS at Cex.io has also increased in price over the past seven days. Over the past seven days Cex.io had 2200 (BTC) volume for GHS, whereas Bitfinex had 470 TH  (or around 600 BTC) volume.  So the GHS contract might be dominating the market. That said, it is a permanent contract (assuming they don't increase the fees to the point of killing it off) whereas TH1 loses all of its value in 77 days.

I think the increase is simply due to a decrease in the expected rate of rise difficulty.

I'm a bit confused about this swap issue. Right now to short the security you pay 0.3% a day.  0.3% of the borrowed currency, which would be th1 contracts. When do these get compounded.?
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September 30, 2014, 03:08:54 AM
 #11

It doesn't get compounded.

Interest is charged around 8pm-10pm EST.  The larger cost is the dividends (currently should average 0.014 BTC/day - but varies).  Shorters pay the dividends to person lending the contract.

Your interest might be charged in BTC or USD. I think this depends on your settings. So my interest in charged in USD if available, and then BTC if not.

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September 30, 2014, 08:12:43 AM
 #12

I'm shorting this asset. I think it is grossly overpriced and will only mine around 0.85-0.95 BTC.  

How are you calculating that? How much are you expecting difficulty to increase?
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September 30, 2014, 06:57:49 PM
Last edit: September 30, 2014, 07:19:55 PM by nrd525
 #13

I'm expecting a 10% increase.  The next increase might be lower (currently bitcoinwisdom forecasts 4.5% - and it is too early for an accurate forecast), but after that I expect it to return to 10%.

I'm not an expert on mining. I know there are some new miners in production.  Not sure if they are being shipped out at a good rate (or added to cloud or industrial mining operations).

With a 0% increase, followed by 10% increases - you mine 0.91.  Even with a 0% increase followed by 7% increases you still only mine 0.95.  With constant 10% increases you mine 0.84.


Reminder - when calculating how much swap interest you will make you need to 1) deduct the 15% fee and 2) reduce your interest by 1.5-2%/day - as the contract should be losing value at that rate or greater.

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September 30, 2014, 07:39:34 PM
 #14

GHS is up 8.7% in the past 24 hours.

https://bitcoinwisdom.com/markets/cexio/ghsbtc

So GHS is Trading at 2.7 BTC / THs which cannot be profitable.

If TH1 tracked that contract, you might expect it to also increase in price. It might be going up a little. There is a strong bid wall (25) at 1.255.

I think the limited available of swap and Bitfinex refusing to issue any more shares is supporting the artificial price.

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October 01, 2014, 01:15:13 AM
 #15

They are adding 100 shares after the next block is mined.  Could take as long as 24 hours or as little as 0.

https://www.bitfinex.com/pages/announcements

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October 01, 2014, 11:22:18 AM
 #16

What I don't understand with all the negativity on long TH1 is even with a difficulty increase with 10 TH1 contracts will get you  .2btc per day so even if contract price goes to zero ur still gonna make 20% by mid December. This is the facts as I have owned TH1 since day one with an average of 1.2 BTC per TH1. So I plan on holding it to expirery unless it rises to a price that I can't resist selling 
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October 01, 2014, 11:50:28 AM
 #17

You will receive less for a dividend every period where the difficulty increases.
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October 01, 2014, 12:16:35 PM
 #18

The difficulty would have to increase a lot more then predicted to cause a loss from claiming the dividend and letting the contract expire, assuming you owed it close to the beginning of the contract.
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October 01, 2014, 07:22:18 PM
 #19

NightWatch - how much do you expect difficulty to rise and how much do you expect the TH1 contract to mine between now and Dec 15?

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October 01, 2014, 07:41:35 PM
Last edit: October 01, 2014, 08:58:57 PM by nrd525
 #20

So far 24 hour TH1 contract volume is 25.  Last time I checked (12 hours ago) it was around 12.

I don't see the 100 new issued shares.  I suspect they are slowly adding them to the market to avoid the fall in price that would come from a market sell order.

...

Edit: Some evidence of the 100 new shares can be found in the increase in TH1 swaps (from 204 to 224) and the swap offers have another 29 available.  So that is an increase of 49 which fits with the previous case where 52% of the swaps were being lent out.

I'm very puzzled as to why 48% of the swaps aren't lent out.  I guess the market has a large number of short term traders?  It's strange that they don't lend it out for the minimal 2 days.

Do stop-loss orders appear on the order books?  If not, it could be that they've got stop losses and want to be able to liquidate their position.

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October 02, 2014, 12:43:37 PM
 #21

i margin selling TH1 1.299 btc from 2014.10.01

i think i will make total profit something like 50 % - 17% swap cost = 33% with 10 % diff increese
3 % with 0 % diff increese

and lost if diff start going down
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October 02, 2014, 06:53:11 PM
 #22

When I first started shorting the investment, I figured it would go down slowly - at least at the 1.5-1.7% of its value that was being mined each day.

Now that the price has slightly increased over the past ten days - I think it's going down in a crash.  Probably 20%. Possibly 30%.  Each day that it doesn't go down only increases the severity of the upcoming crash.

When it crashes there will be people left holding the contract who will lose out a lot of money from 1) the 20+% loss in contract value and 2) swap rates will decline to 0.1% or less.

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October 02, 2014, 07:45:04 PM
 #23

I asked support about how they were issuing the contracts.  I got this response from Raphael, Bitfinex CTO:

Hello,

We issue the additional contracts by first, getting the hashing provider to
agree to lease us the additional hashing power, then we sell them in bulk
to a market maker at a mutually agreed price.  The market maker then
releases the contracts into the market by either selling them or lending
them, or alternatively, holding them and earning the block rewards.
Bitfinex has no interest in or control over the the order book.  The
announcement of commencement after the next mined block for the additional
contracts is merely to be establish a future (but unknown) delivery
date/time from our hashing provider to our market maker.  It also creates
transparency in the accounting of the block rewards.

Please remember that this is a beta test for us and that our issuance
practices will likely evolve over time.



--

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October 02, 2014, 08:39:53 PM
 #24

I'm wondering how to balance my position so that by shorting TH1 I am not altering my asset allocation in favor of USD or BTC.

My TH1 short is currently at a small loss.  But it should be in a profit soon as the contract's value is going to zero.  At the end of the TH1 life, any existing shorts will have a large BTC profit.  However to keep your short, you will have paid out a large amount of dividends and swap payments from your trading wallet.

The complication is that the dividends and swap payments can be paid out of USD or Bitcoin.  If you pay them out of Bitcoin, you aren't changing your asset allocation. But if you pay them out of USD then you are (as you will reap the profit in Bitcoin). 

The easy solution would be to only pay dividends and swap in Bitcoin.  However if you are shorting on the margin, you may want to back up the asset with USD as well to avoid a margin call.

It looks like I'm currently paying dividends in Bitcoin and swap in USD.   This is a decent system as 90% of my expected shorting cost is from dividends.  However it does mean that I am altering my asset allocation away from USD to BTC (by this 10% of swap payments - and also from my expected profits which are all in BTC).

...

If a long TH1 position receives their swap payments in USD, they are shifting their asset allocation from BTC to USD.

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October 02, 2014, 08:56:00 PM
 #25

I'm wondering how to balance my position so that by shorting TH1 I am not altering my asset allocation in favor of USD or BTC.

My TH1 short is currently at a small loss.  But it should be in a profit soon as the contract's value is going to zero.  At the end of the TH1 life, any existing shorts will have a large BTC profit.  However to keep your short, you will have paid out a large amount of dividends and swap payments from your trading wallet.

The complication is that the dividends and swap payments can be paid out of USD or Bitcoin.  If you pay them out of Bitcoin, you aren't changing your asset allocation. But if you pay them out of USD then you are (as you will reap the profit in Bitcoin). 

The easy solution would be to only pay dividends and swap in Bitcoin.  However if you are shorting on the margin, you may want to back up the asset with USD as well to avoid a margin call.

It looks like I'm currently paying dividends in Bitcoin and swap in USD.   This is a decent system as 90% of my expected shorting cost is from dividends.  However it does mean that I am altering my asset allocation away from USD to BTC (by this 10% of swap payments - and also from my expected profits which are all in BTC).

...

If a long TH1 position receives their swap payments in USD, they are shifting their asset allocation from BTC to USD.

What wallet do the dividend payments come out of if shorting and how do I set it to USD or BTC?

https://bitfinex.com/?refcode=UInJLQ5KpA <-- leveraged trading of BTCUSD, LTCUSD and LTCBTC (long and short) - 10% discount on fees for the first 30 days with the refcode
My feedback thread: Forum thread
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October 02, 2014, 09:28:21 PM
 #26

The payments come from the trading wallet.

The account settings has an option for whether to pay exchange fees in USD or BTC/LTC. But this is only for the 0.1% or 0.2% fee.  I haven't seen any setting for dividends or swap. 

I'm guessing you only have one currency in the wallet - then they take that. Otherwise it looks like dividends get paid in BTC, and swap in USD.

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October 02, 2014, 09:45:16 PM
 #27

i predicting flash dump for th1 for something like 30-50 %,, 1.30 --->0.65-1 btc,
just like from 2--->1 and just like everytime one cex.io
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October 02, 2014, 10:11:59 PM
 #28

Bid and Ask wall is interesting.  There is an unusual number of amounts of "10" on both sides.

Asks
1.32: 10
1.4: 10.1
1.48: 10
1.55: 10

Bids
1.266: 10.33
1.24: 10
1.23: 10
1.2: 10.1
1.19: 10.35


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October 02, 2014, 10:54:37 PM
 #29

When I first started shorting the investment, I figured it would go down slowly - at least at the 1.5-1.7% of its value that was being mined each day.

Now that the price has slightly increased over the past ten days - I think it's going down in a crash.  Probably 20%. Possibly 30%.  Each day that it doesn't go down only increases the severity of the upcoming crash.

When it crashes there will be people left holding the contract who will lose out a lot of money from 1) the 20+% loss in contract value and 2) swap rates will decline to 0.1% or less.

Where to get so many swaps to dump into all these paywalls? My bet is the dump will be near expiration and up to that point we will trade at a large premium...

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October 02, 2014, 11:17:58 PM
 #30

As we near the contract expiration, the risk of the flash crash increases.

The holders are chasing a 1.1-1.2% daily profit -- if the contract mines 0.014 BTC and doesn't lose value.  They cannot lend out the contract for fear that the crash would occur as most swaps are 30 days.  I'm guessing they aren't doing 2 day swaps because they have stop losses (which aren't showing up on the order book - I'd love confirmation that stop losses are hidden, does anyone know?).

So a 1.1%-1.2% profit vs a loss of 20% in a flash crash might seem like good odds. The odds will be especially bad if we get within 30 days of expiration.  Or if the flash crash is 50%.

Unless they are getting the shares at a heavy discount (1.1 BTC or less), the market maker it taking a huge risk as they are taking at least 2 days to sell the newly issued shares.   So at some point they'll want to market sell them. 





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October 03, 2014, 07:09:40 AM
 #31

I'd love confirmation that stop losses are hidden, does anyone know?

Stoplosses can not be seen because they are not actual orders, they are conditions when the system will create orders.

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October 03, 2014, 08:29:59 PM
 #32

GHS price down 10% in the past 24 hours.  Will it affect TH1?

https://bitcoinwisdom.com/markets/cexio/ghsbtc

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October 05, 2014, 02:35:24 PM
 #33

this th1 marked is f****d, they making walls from 1.2-1.3 btc/th1, and people cant sell into it, no margin for that,

1.2-1.3 btc/th1 is too much high and only for speculation, not for mining.
i hope on 15.12.2014 my all sell position will be closed with 0.00btc/th1 buy orders, i dont want paying high swap after 15.12.2014 just becouse manipulation when i cant close my positions for 0.00 btc/th1 becouse they manipulating prize high
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October 05, 2014, 02:59:25 PM
 #34

this th1 marked is f****d, they making walls from 1.2-1.3 btc/th1, and people cant sell into it, no margin for that,

1.2-1.3 btc/th1 is too much high and only for speculation, not for mining.
i hope on 15.12.2014 my all sell position will be closed with 0.00btc/th1 buy orders, i dont want paying high swap after 15.12.2014 just becouse manipulation when i cant close my positions for 0.00 btc/th1 becouse they manipulating prize high

The only reason I'm not heavily shorting it is because I'm also worried about short squeezes. I wish there were put options or some other way to short it with limited losses.
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October 05, 2014, 05:13:39 PM
 #35

this th1 marked is f****d, they making walls from 1.2-1.3 btc/th1, and people cant sell into it, no margin for that,

1.2-1.3 btc/th1 is too much high and only for speculation, not for mining.
i hope on 15.12.2014 my all sell position will be closed with 0.00btc/th1 buy orders, i dont want paying high swap after 15.12.2014 just becouse manipulation when i cant close my positions for 0.00 btc/th1 becouse they manipulating prize high

The only reason I'm not heavily shorting it is because I'm also worried about short squeezes. I wish there were put options or some other way to short it with limited losses.

Yeah, between the lack of liquidity, the relatively high daily cost of borrowing, and this possibility, it's a risky place to be right now. It's keeping me out of it.
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October 06, 2014, 08:40:05 PM
 #36

Hash rate is spiking.  Bitbet on > 41 million difficulty by November has two bets that say "yes" (reversing the no trend).

Next difficulty adjustment might be 3.5% (bitcoinwisdom currently predicts 3.7%). For a while it looked like 0%.

Th1 market price is in a very slow decline.  Oct 1 was around 1.285 and now it is around 1.27.  It should be falling by around 1.7%/day.  So the artificial premium continues to grow.


Who is shipping miners these days?

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October 07, 2014, 09:57:38 PM
 #37

Sept 27 - Oct 7th
Expected mining (after the 3% fee): 0.155
Actual mining: 0.187  

This might be off by several percent, but I still think we've been having some good luck in our mining performance.  However, it could just be randomness as we've mined as many as 5 blocks in a day.  With this level of variance I'd expect the occasional day where we mine 0 blocks.

That said - according to probability theory you don't expect your luck to even out.

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October 08, 2014, 12:12:32 PM
 #38

Me thinks its not luck, its pure fraud. Me thinks there is no 3,500 THs pool that mines these blocks, if you check blocks on blockchain they are mined by different pools. How are they selected to be included in TH1 contract god only knows. Marketmaker is holding most contracts, not selling them but providing swaps, so he is interested in more "luck", later when he sells them "luck" will be gone )))

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October 08, 2014, 07:54:10 PM
 #39

Zero mined blocks so far today. Price spikes to 1.32 BTC.


I'm worried. There is a chance that someone is manipulating the price of the TH1 contract.

1. Buy most of the contracts. Establish a floor price of 1.27.  Do not let the floor price fall below 1.27.

2. Make mining dividends - same as usual.

3. Make swap interest. But instead of getting declining swap payments (as the value of the contract shrinks), you actually get increasing swap payments as the contract's premium over its mining worth increases. For instance, on the last day you will be able to make as much as 1.26 BTC by lending out the contract to a shorter.  Now ultimately you will not be able to lend out all of your contracts, but so long as you lend out most of them - and so long as there is strong competition between shorters - you should be able to manipulate the market and make a lot of profit.

There is unlimited (or near unlimited) demand to short a contract that is over-valued. By contrast the supply of these contracts is limited.

There is already evidence that this plan works. For instance, until I thought of this - I was interested in investing increasing amounts of money into shorting TH1 - because it looks (on paper) that I stand to make increasing profits.

Do you see any flaws in this reasoning?

Is there any other logical reason for the price holding at 1.27? If the contract price declines at 1/77th per day and you have conservative estimates: difficulty increases by 0% and the swap rate is 0.7%/day - a TH1 contract holder should only break even according to my spreadsheet.

If this is true, a possible remedy is to constantly increase the supply of the contract.  Even if the manipulator has very deep pockets, the people shorting the contract won't necessarily have them - AND they'll be reluctant to short the contract if manipulation is possible. So the other solution is to educate shorters about this possibility.


If this is true, it is also possible that other people will buy the TH1 with the intention of making a lot of mining dividends and then reselling the contract at 1.27.  This will drive the price of TH1 up. This is fine for the manipulator as they are able to increase their income from swap interest or choose to liquidate part or all of their position.

Is there anyway this could be solved by allowing naked shorting or contracts for difference?


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October 08, 2014, 09:45:08 PM
 #40

What would be even worse is if the market maker was also the market manipulator and using their market maker position to restrict supply so that they can maintain control of the market.

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October 08, 2014, 11:41:04 PM
 #41

Can you see any evidence of market manipulation?
https://api.bitfinex.com/v1/trades/th1btc

Also - is there a URL that provides a list of all the bids and asks?  That might be easier to detect manipulation. One possibility is that a market manipulator would be constantly reinforcing the bids (though this would be hard to differentiate from a market maker who was selling newly issued contracts).

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October 09, 2014, 12:04:03 AM
 #42

Someone is constantly selling small amounts (0.01-0.03 BTC) and then buying them back at a higher price within an hour or so.

And larger amounts:
{"timestamp":1412729320,"tid":3426908,"price":"1.285","amount":"0.18962131","exchange":"bitfinex","type":"buy"},{"timestamp":1412726666,"tid":3426390,"price":"1.276","amount":"0.18962131","exchange":"bitfinex","type":"sell"},

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October 09, 2014, 10:03:22 AM
 #43

The expected return of shorting TH1 keeps increasing. The only problem is a possible short squeeze. It would be great to be able to short it with a limited loss, by buying put options for example.
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October 09, 2014, 12:51:49 PM
 #44

Also - is there a URL that provides a list of all the bids and asks? 

Try bfxdata.com

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October 09, 2014, 04:08:08 PM
 #45

wtf is happen, prize still 1.30, if this not fall down, soon everyone shorter will be margin called and lost all money
+ swap cost is very high, and no more contract 500 is all ?
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October 09, 2014, 04:30:43 PM
 #46

The expected return of shorting TH1 keeps increasing. The only problem is a possible short squeeze. It would be great to be able to short it with a limited loss, by buying put options for example.
The other problem is a swap squeeze. Imagine if interest rates hit 99% on the final day and the contract value is still 1.27.  Imagine if 30 days before this the swap rate hits 3.3%/day.

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October 09, 2014, 04:31:37 PM
 #47

Also - is there a URL that provides a list of all the bids and asks? 

Try bfxdata.com
Now I'm looking for bid and ask walls over time which I don't think they provide. You need to store them. I'd like to look for market manipulation.

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October 09, 2014, 06:49:00 PM
 #48

The expected return of shorting TH1 keeps increasing. The only problem is a possible short squeeze. It would be great to be able to short it with a limited loss, by buying put options for example.
The other problem is a swap squeeze. Imagine if interest rates hit 99% on the final day and the contract value is still 1.27.  Imagine if 30 days before this the swap rate hits 3.3%/day.

Depending on the price, that wouldn't last, as people could buy TH1 and offer to lend it for less than a gigantic interest.
And you can get 30 day loans to make that kind of problems less likely.
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October 09, 2014, 07:19:02 PM
 #49

10 sized buy orders by marketmaker removed. Correction is coming? They should increase quantity of contracts more than by 100 next time.

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October 09, 2014, 07:34:25 PM
 #50

th1 dump begin 1 hour ago, now still chance to sell you th1 high

This is not margin selling with using swap, this is normal Exchange sell TH1, this mean big dump, i think 0.7 low


marketmaker trying to sell so much th1 what he can, then will dump prize to 0.7-0.8 i think
1.281 10 th1 looks like marketmaker buy order, sell into it if you dont want lost on flashdump
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October 09, 2014, 07:35:42 PM
 #51

The expected return of shorting TH1 keeps increasing. The only problem is a possible short squeeze. It would be great to be able to short it with a limited loss, by buying put options for example.
The other problem is a swap squeeze. Imagine if interest rates hit 99% on the final day and the contract value is still 1.27.  Imagine if 30 days before this the swap rate hits 3.3%/day.

Depending on the price, that wouldn't last, as people could buy TH1 and offer to lend it for less than a gigantic interest.
And you can get 30 day loans to make that kind of problems less likely.

The price is going to be 1.27 on the final day (or higher) as it will be maintained by the market manipulator.

Or the price will be 1.27 going into the last 30 days, and you will need to spend 2-3% interest/day if you want a 30 day contract.
Someone could offer it for less interest, but why would they?  All of the lower interest contracts would be borrowed, and there would still be demand for the higher interest swaps as long as they were providing a modest profit to the shorters.

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October 09, 2014, 07:37:37 PM
 #52

th1 dump begin 1 hour ago, now still chance to sell you th1 high

This is not margin selling with using swap, this is normal Exchange sell TH1, this mean big dump, i think 0.7 low


marketmaker trying to sell so much th1 what he can, then will dump prize to 0.7-0.8 i think
1.281 10 th1 looks like marketmaker buy order, sell into it if you dont want lost on flashdump

Not much of a dump.  The price was higher than average for the past 15 days and is returning to a possible 1.27 floor.

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October 09, 2014, 08:13:05 PM
 #53

th1 dump begin 1 hour ago, now still chance to sell you th1 high

This is not margin selling with using swap, this is normal Exchange sell TH1, this mean big dump, i think 0.7 low


marketmaker trying to sell so much th1 what he can, then will dump prize to 0.7-0.8 i think
1.281 10 th1 looks like marketmaker buy order, sell into it if you dont want lost on flashdump

Not much of a dump.  The price was higher than average for the past 15 days and is returning to a possible 1.27 floor.
you dont see no buy support ?, what is point to delete fake buy support if you dont want dump prize ?
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October 09, 2014, 09:02:02 PM
 #54

My apology. You are correct that there is a big decline in the Bids wall.  How many bids are gone?  50? 
There is still 112 bid support at 1.09 - which is still way too high.



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October 09, 2014, 10:27:50 PM
 #55

i remember hids up to 200+ now up to 150
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October 10, 2014, 08:06:15 PM
Last edit: October 12, 2014, 08:35:19 AM by odolvlobo
 #56

Even assuming that the difficulty does not rise at all, the bid is more than the mining income will be. Bidders must now be expecting the difficulty to fall by 12/15 (by more than 30%). Or perhaps they are cex.io refugees that are happy to pay for the privilege of mining.

Assuming that the difficulty remains constant, mining income for 1 TH/s until 12/15 will be about 0.94 BTC.

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October 12, 2014, 02:20:18 AM
 #57

It seems pretty obvious that the market is being manipulated.  The price on an overvalued depreciating asset should not be going up. 

In a few days the people who shorted on day 1 will be looking for more swap, and it either won't be there or it will be there at a high cost.  So that means a lot of people are going to be forced to buy, and that's going to push the price up and maybe make some people liquidate their short positions (pushing the price up even higher).  Those who bought, even at an over-valued price, will turn around and sell at a higher profit.

You should consider closing your short positions before that happens.
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October 12, 2014, 03:34:51 AM
 #58

good luck i not closing my short position with loss, if bitfinex not add more swap then, they are will be responded for this manipulation, they made this contracts with option of margin selling, and if this fail, becouse them i hope they reapir mistakes on some way.

Becouse this i can lost all my money, i shorting 4xth1 from 1.3 from 12 days, if prize will be going up and swap cost too, then i will lost all and bitfinex team will be responded for that becouse not adding more assets
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October 12, 2014, 04:53:49 AM
 #59

I closed my short position at a large loss.

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October 12, 2014, 04:55:29 AM
 #60

Even assuming that the difficulty does not rise at all, the bid is more than the mining income will be. Bidders must now be expecting the difficulty to fall by 12/15 (by more than 10%). Or perhaps they are cex.io refugees that are happy to pay for the privilege of mining.

Assuming that the difficulty remains constant, mining income for 1 TH/s until 12/15 will be about 1.14 BTC.

0% difficulty increase - I get 0.94 BTC (Oct 10 to Dec 15 - and I only count half of Dec 15 due to it ending at noon).
Remember 3% pool fee.  Not sure how you'd be off by 17% though.

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October 12, 2014, 05:08:48 AM
 #61

I feel your pain. I closed my position today at a total loss of .77 btc, and I count myself lucky it wasn't worse.  I think if bitfinex does this again they should offer unlimited swap contracts at a rate of 1.11% (rate of depreciation).  If they suddenly add more liquidity now though then I'll be pissed.
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October 12, 2014, 05:19:46 AM
 #62

Someone should start a bet on Bitbet.  Any suggestions?  Ex. you could bet that the contract would mine less than 1 BTC between Oct 15 and Dec 15.  Though that is actually a fairly boring bet as I'd give it a 90-95% probability.  You could have a bet that Bitfinex will reverse the trades.  That might get the manipulator worried.  Or you could bet that the contract value exceeds 2 BTC before it expires.

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October 12, 2014, 05:29:44 AM
 #63

I feel your pain. I closed my position today at a total loss of .77 btc, and I count myself lucky it wasn't worse.  I think if bitfinex does this again they should offer unlimited swap contracts at a rate of 1.11% (rate of depreciation).  If they suddenly add more liquidity now though then I'll be pissed.

I don't think they can offer naked swaps.  The swaps need to be backed up by something.  

They could possibly sell a set of two contracts for $0.
1. A short position
2. A long position

So you would spend $0 and receive one of each contract. Then you could buy and sell them - letting everyone be market makers.  If they aren't able to instantly add/remove mining capacity (and I think they lack this magical ability) then the "dividend" could be based on the mining of a pool - without actually doing any mining.  This "fake mining" has the tiny advantage of making you more money as you aren't adding to the mining hash rate. And you shouldn't need to pay the pool fee =)

I think this removes the need for swaps and might solve the manipulation problem.  Do you see any problems with it?

The University of Iowa Electronic Market (http://tippie.uiowa.edu/iem/) uses a similar approach. They sell contracts for political events like who will win the US presidential election (somehow this isn't seen as gambling). For $1, they issue three contracts 1) Democrat wins, 2) Republican wins, 3) Other wins.  One of these three contracts will be worth $1.  They also sell contracts based on a percent (Ex. percent of vote a political party will get in an election).

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October 12, 2014, 08:23:47 AM
 #64

Even assuming that the difficulty does not rise at all, the bid is more than the mining income will be. Bidders must now be expecting the difficulty to fall by 12/15 (by more than 10%). Or perhaps they are cex.io refugees that are happy to pay for the privilege of mining.

Assuming that the difficulty remains constant, mining income for 1 TH/s until 12/15 will be about 1.14 BTC.

0% difficulty increase - I get 0.94 BTC (Oct 10 to Dec 15 - and I only count half of Dec 15 due to it ending at noon).
Remember 3% pool fee.  Not sure how you'd be off by 17% though.

Thanks for correcting me. My spreadsheet had an error.

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October 12, 2014, 06:40:07 PM
 #65

I've appealed for help on reddit and am being misunderstood by people who don't understand the contract.

How will this end?
The interest rate is going up.  The TH1 swap market is very tight.  Currently there is unfilled demand for 2 TH1 contracts at 0.45%. Around 5 days ago, you could get swap for 0.25%.  For the past 2-3 days there has only been 0-3 TH1 contracts of swap on offer. The offer rate is 0.789% to 1%.

The price is going up.  Since Sept 18, the price has increased from 1.1 to 1.35.

The shorts will get squeezed.  However they might get squeezed by either 1) an increase in price due to people buying to close their position or 2) an increase in swap rates.

The increase in swap rates will cause people to want to close their position. However, they may also think that if they hold on that they will manage to cut their losses or even make a profit.  If they close their position, it is likely that new suckers who do not understand the market will take their place - so thus the price rise should be minimal.

If people become aware of this potential manipulation and demand for swap falls, it is possible that the manipulator will decide to exit the market - selling their shares for more than they bought them (perhaps 1.35 to 1.5) and having earned a daily dividend of around 1.5% (and also a 0.23% swap rate on maybe 50% of the contracts that they've lent out).   This could trigger a price collapse, or it is possible that another manipulator will take their place.

If people decide to hold on, swap rates will get even higher. They'll hit 1%/day soon, and continue climbing until they hit 3% in the last 30 days.

It is possible that other people will join with the manipulation and go long.  Either short-closing or people going long - could cause the contract price to spike to 2-3 BTC or more.  The entire ask wall could disappear and the basis for paying swap would be much greater.  If this happens, someone will decide to cash out and it might be the end of the manipulation.

If the manipulation ends, there is always the possibility of a second cycle of manipulation.

The only way to short this contract without massive risk is to wait until the last 30 days and get a 30 day swap at a fixed rate.

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October 12, 2014, 06:48:03 PM
 #66

I've appealed for help on reddit and am being misunderstood by people who don't understand the contract.

How will this end?
The interest rate is going up.  The TH1 swap market is very tight.  Currently there is unfilled demand for 2 TH1 contracts at 0.45%. Around 5 days ago, you could get swap for 0.25%.  For the past 2-3 days there has only been 0-3 TH1 contracts of swap on offer. The offer rate is 0.789% to 1%.

The price is going up.  Since Sept 18, the price has increased from 1.1 to 1.35.

The shorts will get squeezed.  However they might get squeezed by either 1) an increase in price due to people buying to close their position or 2) an increase in swap rates.

The increase in swap rates will cause people to want to close their position. However, they may also think that if they hold on that they will manage to cut their losses or even make a profit.  If they close their position, it is likely that new suckers who do not understand the market will take their place - so thus the price rise should be minimal.

If people become aware of this potential manipulation and demand for swap falls, it is possible that the manipulator will decide to exit the market - selling their shares for more than they bought them (perhaps 1.35 to 1.5) and having earned a daily dividend of around 1.5% (and also a 0.23% swap rate on maybe 50% of the contracts that they've lent out).   This could trigger a price collapse, or it is possible that another manipulator will take their place.

If people decide to hold on, swap rates will get even higher. They'll hit 1%/day soon, and continue climbing until they hit 3% in the last 30 days.

It is possible that other people will join with the manipulation and go long.  Either short-closing or people going long - could cause the contract price to spike to 2-3 BTC or more.  The entire ask wall could disappear and the basis for paying swap would be much greater.  If this happens, someone will decide to cash out and it might be the end of the manipulation.

If the manipulation ends, there is always the possibility of a second cycle of manipulation.

The only way to short this contract without massive risk is to wait until the last 30 days and get a 30 day swap at a fixed rate.

you forget about one, if bitfinex add more assets then all will change
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October 12, 2014, 07:20:21 PM
 #67

Right. 

Either
1) Bitfinex adds more contracts and the manipulator has enough funds to manipulate them. Damage increases.

2) Manipulator's funds are exceeded and the price collapses.

I think they are restricted in how many contracts they can add as they have real hardware backing up the contracts and their contract with the mining company limits their ability to add contracts.  As such, I think that adding more contracts will fail.


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October 12, 2014, 07:27:16 PM
 #68

Number of outstanding swaps: 302.49 TH1.  It will be interesting to track this number, as it should decline if people decide to stop shorting it.

Does anyone know what the highest value was?  I think it might have been as high as 318. I don't recall it going over 320.

For the record, I was shorting 38 TH1 contracts.  So when I closed my position - at least half of the shorts were taken over by new people.

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October 12, 2014, 07:28:02 PM
 #69

They should sell an unlimited amount of TH1 at a certain price. For example, at the open price. And then reduce it every day by a certain percentage.

They could also add put options.
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October 12, 2014, 07:59:21 PM
 #70

They should sell an unlimited amount of TH1 at a certain price. For example, at the open price. And then reduce it every day by a certain percentage.

It's not that easy. The income generated by the contracts has to come from somewhere.

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October 12, 2014, 08:13:29 PM
 #71

if margin trading contract will fail, they should refund all victims =shorterst, 13 days since no more assets, i dont know what will happen with me i shorting 4 th from 12 days 1.3 prize, and manipulation was started since no more assets- swaps. this market th1 is not fair play since bitfinex randomly put new assets. and now 500 is all, and 300 = swap, and remaining 200 i think people want sell high, and all shorterst will be forced to liquidation
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October 12, 2014, 10:24:37 PM
 #72

but still chance  i think soon prize will dump, 300 th1 in swap but still 200 th1 remaining and can be dumped
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October 12, 2014, 10:59:45 PM
 #73

It's not that easy. The income generated by the contracts has to come from somewhere.

Those who receive swaps (e.g. shorters) pay the dividend on the contract.  This allows those holding contracts to offer swap without losing dividend.
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October 13, 2014, 12:46:33 AM
 #74

Another solution: extending the maximum swap lifetime to 90 days.  The 30 day maximum is due to regulation - not sure if they are registered in the same country as when they changed it.

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October 13, 2014, 01:33:35 AM
 #75

look at buy support, nothing i hope prize will drop to 1.0-1.1 and bitfinex will add 500 more assets, and make some changes like 90 days swap, and better adjustment for max swap prize or aomething
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October 13, 2014, 04:24:02 AM
 #76

Another solution: extending the maximum swap lifetime to 90 days.  The 30 day maximum is due to regulation - not sure if they are registered in the same country as when they changed it.

This might be a perfect solution.  Regulation was likely related to BTC and USD, doubtful the regulations would include lending hashing power.

Buy support does seem to be dropping but still totally being manipulated.

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October 13, 2014, 05:05:23 AM
 #77

Someone is selling. TH1 swap down to 292.5.  Price is down, but there is also nothing on the order book from 1.283 to 1.399.  Does the swap interest get calculated based on an average of the bid and ask, or something else?


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October 13, 2014, 08:05:17 AM
 #78

Someone is selling. TH1 swap down to 292.5.  Price is down, but there is also nothing on the order book from 1.283 to 1.399.  Does the swap interest get calculated based on an average of the bid and ask, or something else?



i dont know too why swap down for 10, after someone sold 10, but i think someone end swap time, and some swap provider sold 10 th1, but what with this guy who need more not existing swap to support position ? his short position is now without real swap ?
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October 13, 2014, 09:22:50 AM
 #79

They should sell an unlimited amount of TH1 at a certain price. For example, at the open price. And then reduce it every day by a certain percentage.

It's not that easy. The income generated by the contracts has to come from somewhere.

From the estimated expected mined amount taking into account the total hashrate.
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October 13, 2014, 09:23:58 AM
 #80

Another solution: extending the maximum swap lifetime to 90 days.  The 30 day maximum is due to regulation - not sure if they are registered in the same country as when they changed it.

But you still have the short squeeze problem. If price goes up a lot, you'll get liquidated.
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October 13, 2014, 02:12:27 PM
Last edit: October 13, 2014, 04:09:43 PM by twentyseventy
 #81

Is the total number of contracts in the market 500 original + the 100 later added = 600?

If so, that means that about half of the outstanding contracts (~295) are being shorted right now per http://bfxdata.com/combined/th1.php

Looks dangerous to me

EDIT: See now that the total is 500
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October 13, 2014, 03:54:34 PM
 #82

Someone is selling. TH1 swap down to 292.5.  Price is down, but there is also nothing on the order book from 1.283 to 1.399.  Does the swap interest get calculated based on an average of the bid and ask, or something else?

I think people are receiving swap but not using it right away.  If there is a short squeeze on Wednesday then that will likely be the best time to place another short.  Otherwise it is people closing their short positions and the person holding the contract not willing to offer swap so they themselves can sell during the squeeze.
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October 13, 2014, 04:23:04 PM
 #83

I'm still trying to wrap my head around the costs and complexities of shorting TH1. What are the downsides to closing active TH1 swaps at high interest rates and replacing them with lower interest rate swaps?

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October 13, 2014, 06:12:15 PM
 #84

As far as I can tell, none.  I was worried that I'd have to pay the interest on the term, but that didn't happen.  Just make sure you have enough unused swap to cover the swaps you are closing.
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October 13, 2014, 06:41:42 PM
 #85

In general, closing high interest rate swaps to replace with lower rate ones is great.  You may end up paying for an extra hour at the old rates - but most of the time it is worth it.

Shorting this contract is a horrible idea. Interest rate swaps are going to increase a lot.  Low interest rates used to be 0.15% (some of my rates were that low).  Now low rates are 0.25-0.3%.

If you love risk - now is actually a decent time to take a long position as the increase in swap rates will encourage people to close their position and drive the price up.  Note: I'm not doing this myself nor do I actually recommend it - though if you have 300-1000 BTC, you could try to take over the market manipulation.

...

For some reason, since the beginning of the contract - there has normally been 40-64% of the issued contracts lent out.  I haven't seen it go over 65%.  In fact you could lend out a contract multiple times - as each time the shorter sells the contract - so one contract can have two or more contracts.  There is always a "last contract" that cannot get lent out (because each time you lend it out someone must short it and thus sell an additional contract). So there will always be 500 contracts that are bought without leverage.  But there can be an infinite (or at least very very large) number of TH1 swaps.

So I'm not sure why the number of TH1 swap is stuck around 60%.  I'd guess it would go higher as swap rates increase, but with sufficient swap rates a 60% lending rate is more than enough for a potential manipulator to rake in huge profits.

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October 13, 2014, 06:44:33 PM
 #86

If you love risk - now is actually a decent time to take a long position as the increase in swap rates will encourage people to close their position and drive the price up.  Note: I'm not doing this myself nor do I actually recommend it - though if you have 300-1000 BTC, you could try to take over the market manipulation.

This was my thought; taking a long position and waiting out the shorters. However, BFX can drop new contracts on the market any time they like, which presents too much risk for this to go either way.
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October 13, 2014, 06:58:29 PM
 #87


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October 13, 2014, 07:01:52 PM
 #88

Fewer bids between 0.7 and 1.1. Might be mostly explained by me.  For most of the time, I had all my bids between 0.6 and 0.9 in anticipation of a crash.

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October 13, 2014, 08:35:03 PM
 #89

Lending rate for BTC is capped at 7%/day. Is it also capped for TH1?

Even if it is capped at 7%, it doesn't affect the manipulation potential as you only need to lend it out at around 3% for the last 30 days.

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October 13, 2014, 09:20:41 PM
 #90

Lending rate for BTC is capped at 7%/day. Is it also capped for TH1?

Even if it is capped at 7%, it doesn't affect the manipulation potential as you only need to lend it out at around 3% for the last 30 days.

this will never happen, why ? becouse not only one person have th1, and somoeone will dump th1 after profit, and left all longers behind.
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October 14, 2014, 12:38:49 AM
 #91

All it takes is one person with 300-600 BTC to buy them up.  Bitfinex has $21 million in USD swaps alone (or >50000 BTC). So the total market capital is probably 100,000+ BTC - maybe even 300,000. In which case this would be as little as 1/1000th of the capital at Bitfinex to make a large profit.

As many people can have the contract as they want, so long as one person with 300+ BTC is willing to buy it at a floor price.  Checkout the Bid wall - it has always been stronger than the Ask wall, and there could be hidden orders or a bot that will add to the wall if it falls too low.

You have to realize that the contract can rise to be worth 10 BTC (or another "crazy" value). Its value is completely independent of the mining value, as you can make 10 BTC lending it out to swap to a shorter.  So long as people are willing to short it - it has value.  You don't lose anything by paying "too much" for the contract.

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October 14, 2014, 01:00:59 AM
 #92

All it takes is one person with 300-600 BTC to buy them up.  Bitfinex has $21 million in USD swaps alone (or >50000 BTC). So the total market capital is probably 100,000+ BTC - maybe even 300,000. In which case this would be as little as 1/1000th of the capital at Bitfinex to make a large profit.

As many people can have the contract as they want, so long as one person with 300+ BTC is willing to buy it at a floor price.  Checkout the Bid wall - it has always been stronger than the Ask wall, and there could be hidden orders or a bot that will add to the wall if it falls too low.

You have to realize that the contract can rise to be worth 10 BTC (or another "crazy" value). Its value is completely independent of the mining value, as you can make 10 BTC lending it out to swap to a shorter.  So long as people are willing to short it - it has value.  You don't lose anything by paying "too much" for the contract.

15.12.2014 all will be worth 0 and shorters will get btc like buying back for 0.00, if you can get in last 30 days, flash return rate then you are safe.

i have flash return rate not so high, in last 2 days, i will be collecting flash rate swap and renew
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October 14, 2014, 01:10:47 AM
 #93

if you have th1 this doesnt mean you will make so much money on swap.

1. you first need found someone who take you swap, and maybe you never find someone for 30 days with high %
2. everyone who bought th1 from 1.05-1.3 will be selling soon for profit from dividens+swap+selling above buying prize.
3.this is big risk to trying manipulate this, i dont think one person have more than 20 th1. ( i dont think marketmaker will be manipulating)
4. this mean soon prize will dump, real return now (1.3 prize) is 15-30 % from swap and 57 % from dividends.

5. you need make 43%+ from swap only to make profit, i think this is risk.
1.05-1.3 th1 holders will dump down to 1.1, then some panic and prize will flashcrash


First longer who start selling will end with profit, and most will lost swap providers


And finally there is 300 swap used, this mean 200 th1 is propably in marketmaker hands, and he will sell this into market and this mean flashcrash,
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October 14, 2014, 02:01:42 AM
 #94

For the first time in a while, there are actually 20.9 TH1 of swap available.

However, a lot of it is short-term.   For instance, 10.43 swap at 0.55% but only for 2-6 days.

I'm predicting a 1% swap rate within the next week.

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October 14, 2014, 02:05:07 AM
 #95



2. everyone who bought th1 from 1.05-1.3 will be selling soon for profit from dividens+swap+selling above buying prize.

They'll hold on and you'll lose money.  There are two more rounds of swap rate increases coming.  The first wave starts around now - and goes until end of the 30-day expiration of swaps from shorting the 400 last issued contracts.

The second wave of swap rate increases is around Nov 15.

If they sell out now, they miss the second round of profit. Even if they sell out now, they could be replaced by a new set of manipulators.

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October 14, 2014, 02:13:27 AM
 #96

1. you first need found someone who take you swap, and maybe you never find someone for 30 days with high %
This is easy. There is no sign that the number of TH1 swaps are decreasing by a major amount even as the rate increases.  We'll know for sure within several days.

3.this is big risk to trying manipulate this, i dont think one person have more than 20 th1. ( i dont think marketmaker will be manipulating)
There are people in bitcoin with $100 million dollars.  For rich people, this is a tiny bet.  For semi-rich people, this is a small bet.  Heck I was shorting 38 TH1 and I'm making $25,000 USD/year.  

4. this mean soon prize will dump, real return now (1.3 prize) is 15-30 % from swap and 57 % from dividends.
The people lending out the contract get to increase the swap rate two times more - in the next several days, and around Nov 15. The swap rate will hit 1% this round, and could hit 3% the next round.
What is your assumed swap rate for the next 60 days?

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October 14, 2014, 02:24:40 AM
 #97

last 24h sell 30 th1, and still 290-300 swap used not going up,
22 buy volume and more swap avaible, this mean some shorterst are out with lost.
and marketmaker or many people with 200 th1 not providing swap, and they are will be dumping
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October 14, 2014, 02:31:11 AM
 #98

The 200 contracts that are sold that aren't available for swap have been puzzling me.

However, it makes sense if the manipulator is going for a short squeeze.  They cannot loan them out because they want to sell them high.

If this is true, we might be seeing a short squeeze within the next week or two.  However it is still a puzzle that they wouldn't lend them out for short periods - the only reason to not do so if you have stop losses on them.

It's also possible that a large number of contracts aren't held by the manipulator. They are simply held by people who are very happy to get the dividends while the contract retains its value.  They might be using stop losses.

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October 14, 2014, 03:22:22 AM
 #99

TH swaps just increased to 321.  And there are 26 swaps on offer (at high interest rates).  This might be an all-time record.  Good way to stop the shorters from panicking while doing a swap rate squeeze.

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October 14, 2014, 04:02:08 AM
 #100

yes i feel like i can be in trap, swap above 320, i closed 2th position, 2th left,
bitfinex failed with not adding more assets,this is so much unprofessional and they not answer about th1, i sent 4-5 mails
people telling bitfinex not answer to nobody about th1
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October 14, 2014, 05:41:56 AM
 #101

All that swap is earning interest.  What happens if the amount owed exceeds the 500 contracts?  So long as no one offers swap past 14.12.2014 then no matter what the price goes to infinity...
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October 14, 2014, 06:47:33 PM
 #102

My argument is that the market is badly designed and wide open to manipulation.

Shorter:
Assumes that the swap rate will be relatively constant for the lifetime of the contract.
Assumes that the value of the contract will decrease over the lifetime of the contract due to mining.
Has no power to ensure that either assumption comes true.

Manipulator:
Assumes the swap rate will increase each time the swaps are renewed.  Ensures this happens by maintaining a floor price (thus increasing the contract's premium compared to its mining value and encouraging shorters who will compete and be willing to pay for the increased swap rate).

Assumes the contract will maintain its value until Nov 15 (the renewal of the last round of 30 day swaps).  Ensures that this happens by maintaining a floor price using their own funds.


Result:
Shorter -  makes a trade that looks slightly profitable given difficulty expectations.

Manipulator - makes a trade that appears to lose money given difficulty expectations, but will make a large profit once they manipulate both the contract price and the swap rate.  Has almost all of the power to affect the swap value and determine the loss or profitability of going short or long.

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October 14, 2014, 07:10:48 PM
Last edit: October 14, 2014, 07:34:32 PM by odolvlobo
 #103

My argument is that the market is badly designed and wide open to manipulation.

Shorter:
Assumes that the swap rate will be relatively constant for the lifetime of the contract.
Assumes that the value of the contract will decrease over the lifetime of the contract due to mining.
Has no power to ensure that either assumption comes true.

Manipulator:
Assumes the swap rate will increase each time the swaps are renewed.  Ensures this happens by maintaining a floor price (thus increasing the contract's premium compared to its mining value and encouraging shorters who will compete and be willing to pay for the increased swap rate).

Assumes the contract will maintain its value until Nov 15 (the renewal of the last round of 30 day swaps).  Ensures that this happens by maintaining a floor price using their own funds.


Result:
Shorter -  makes a trade that looks slightly profitable given difficulty expectations.

Manipulator - makes a trade that appears to lose money given difficulty expectations, but will make a large profit once they manipulate both the contract price and the swap rate.  Has almost all of the power to affect the swap value and determine the loss or profitability of going short or long.


That only works if the manipulator is the only person offering swaps. If there is competition, then the manipulator that tries to set a floor risks losing money on TH1 with no swap to compensate.

I believe there is no manipulation going on. Instead, there is a shortage of swaps because some TH1 longs are simply holding TH1 (and losing money), and some TH1 shorts are paying higher interest rates than they have to.


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October 14, 2014, 08:04:12 PM
 #104

The way the manipulator increases the swap rate is by maintaining a price floor for the TH1 contract.  How do you stop this?

The swap rate is set by the market (eg. open competition).  The swap rate increases over time due to the TH1 contract price increasing relative to its mining value.

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October 14, 2014, 08:15:06 PM
 #105

And as long as the price floor is intact it doesn't matter who is offering the swap, eventually the manipulator is going to add that contract to their position as well.  They might even intentionally be adding swap just to widen the net.

The idea of adding more swap is interesting, but if bitfinex offers swap on the last day, then everyone would pounce on it because if they can sell it then it becomes pure profit.  For this same reason anyone who offers swap past the last day of the contracts is an idiot.  They'll get the mining dividend, but they'll never see any real return from the contract.

I think the only way to make money off this would be to buy contracts, hold them for the mining dividend, and then sell them before it all hits the fan and the price floor drops.
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October 14, 2014, 08:48:07 PM
 #106

i closed all my th1 positions, total lost 20.6 % of my balance
thank you bitfinex for manipulate me
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October 15, 2014, 08:40:56 AM
 #107

damn 1.19 now i closed my positions with huge lost, and 1 day later this drop !!! fuuuck
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October 15, 2014, 06:55:30 PM
Last edit: October 15, 2014, 07:12:22 PM by nrd525
 #108

They issued another 100 shares.

Looks like selling 36 shares caused the price to fall to 1.14.  This does go against my manipulation theory.  However 1.14 still far exceeds the mining value.
Also it isn't clear whether the price is 1.14 or 1.24. There is a wide gap in the offers book.

If this is their solution, I'm tempted to go long.

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October 15, 2014, 07:09:55 PM
 #109

https://www.bitfinex.com/pages/announcements

Beta Mining Contract Changes & Adjustments
Posted: 1 minute ago

In an effort to address some of the community’s concerns surrounding the price premium of TH1 over intrinsic value and lack of liquidity on the book, Bitfinex will be making some adjustments to TH1. Firstly, we would like to plainly state that Bitfinex will not tolerate any behavior that we deem to be manipulative. We are looking closely at the behavior of some of the participants and are mulling over some overall rule changes to discourage certain behaviors system-wide – more to come on that later. Just because the platform permits an unintended use pattern does not mean that we won’t take a punitive approach in dealing with those traders trying to exploit loopholes in a manipulative fashion. This contract is a beta product, and we have reserved the right to make adjustments as necessary to improve the integrity of the product. To that end, the following changes will soon go into effect:

    TH1 no longer good collateral. As of midnight UTC on Monday, October 20th, 2014, TH1 can no longer be used as collateral for opening long swap positions in TH1BTC. Only collateral in the form of BTC, LTC or USD will be permitted. We have made this decision based on the fact that TH1 itself will be worthless at contract expiration.
    Margin requirements will start to increase. As TH1 approached expiration, we will be increasing the Initial Margin Requirement (IMR) and the Maintenance Margin Requirement (MMR) according to the following schedule at midnight UTC on the respective dates:
    Date   IMR   MMR
    Monday, October 20th, 2014    40%    20%
    Monday, October 27th, 2014    50%    25%
    Monday, November 3rd, 2014    60%    30%
    Monday, November 10th, 2014    70%    35%
    Monday, November 17th, 2014    80%    40%
    Monday, November 24th, 2014    90%    45%
    Monday, December 1st, 2014    100%    50%
    Wednesday, December 3rd, 2014    100%    60%
    Friday, December 5th, 2014    100%    70%
    Sunday, December 7th, 2014    100%    80%
    Tuesday, December 9th, 2014    100%    90%
    Thursday, December 11th, 2014    100%    100%

It will be the responsibility of the traders to insure that their positions are backed by enough collateral to avoid any forced liquidation that may result when MMR is increased. We apologize for any inconvenience caused by these changes as we continue to fine-tune this beta product for future offerings.

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October 15, 2014, 07:11:35 PM
 #110

Does this mean that people were taking long positions on TH1 on the margin?

If so, that is pretty crazy.

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October 15, 2014, 07:36:52 PM
 #111

Thanks for posting the update; glad to see that they're attempting to address this.
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October 15, 2014, 07:41:54 PM
 #112


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October 15, 2014, 08:21:02 PM
 #113


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October 15, 2014, 09:09:46 PM
 #114



Order book is filling in.

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October 15, 2014, 09:10:55 PM
 #115

i had buy position for 0.9101 to close short 1.3, and i panic sold for 1.3 with 20 % lost, i should wait !
but i made this decision becouse bitfinex not responded me for any mails from long time, and from 14 days we had no new assets.
and i partly blame bitfinex for my lost.
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October 15, 2014, 09:18:43 PM
 #116

I filed a support ticket with Bitfinex for reimbursement of my loss and I encourage other shorters who closed their positions early to do so as well. I don't think we should be punished for figuring out that the market was poorly designed and taking our own actions in response to Bitfinex's inaction.

If I was shorting now and could close my position at 0.95 BTC, I'd be about even - having made a 0.3 BTC * 38 TH1 profit which is about equal to what I've paid out in dividends.

I think the TH1 price could still fall a bit further. And of course it is likely to over-correct.  The expected difficulty forecast increase (4% - Bitcoinwisdom) is low, but I think at some point the new mining hardware will come online.

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October 15, 2014, 09:24:37 PM
 #117

TH1 swaps down to 232.3. That is a lot of closed shorts.

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October 15, 2014, 09:25:48 PM
 #118

I filed a support ticket with Bitfinex for reimbursement of my loss and I encourage other shorters who closed their positions early to do so as well. I don't think we should be punished for figuring out that the market was poorly designed and taking our own actions in response to Bitfinex's inaction.

If I was shorting now and could close my position at 0.95 BTC, I'd be about even - having made a 0.3 BTC * 38 TH1 profit which is about equal to what I've paid out in dividends.

I think the TH1 price could still fall a bit further. And of course it is likely to over-correct.  The expected difficulty forecast increase (4% - Bitcoinwisdom) is low, but I think at some point the new mining hardware will come online.


i should not listen you and hold my positions, i had 495 ltc, now i have 410 ltc, 1 day waiting more and 575 ltc, i had buy for 0.9103, and you made me little panic
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October 15, 2014, 09:38:49 PM
 #119

this is the worst scenario what i had with th1, closing my positions for 1.32 14-10-2015, one day before drop to 0.9, one f***ing day and bitfinex making announcements, i lost money becouse manipulators+bitfinex and this topic.
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October 15, 2014, 09:40:30 PM
 #120

I'm sorry that you lost money following my advice.   We're in the same boat on this one.  I closed my positions at an even higher price than you (but with less dividends).

I think it is possible that my emails to Bitfinex encouraged them to act sooner and saved other shorters money.

I think it is also possible that Bitfinex will reimburse our losses.  If not, I'm going on a medium sized PR war against them. First up - an article in Coindesk exposing how they caused their users to lose money. Also: a signature campaign.

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October 15, 2014, 09:53:49 PM
 #121

Here is my proof, i not lying
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October 15, 2014, 10:25:16 PM
 #122

I'm sorry that you lost money following my advice.   We're in the same boat on this one.  I closed my positions at an even higher price than you (but with less dividends).

I think it is possible that my emails to Bitfinex encouraged them to act sooner and saved other shorters money.

I think it is also possible that Bitfinex will reimburse our losses.  If not, I'm going on a medium sized PR war against them. First up - an article in Coindesk exposing how they caused their users to lose money. Also: a signature campaign.

you can use my case and nick too : lg1500
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October 15, 2014, 10:52:38 PM
 #123

Looks like the contract is still over priced.  It is worth around 0.90 BTC, but only if you have 3% difficulty increases, and a 0.4% swap rate.  So it might be worth as little as 0.8 BTC.

The swap rate is impossible to predict at this point.  The whole market is pretty much impossible to predict as well.  They could issue another 100 contracts each 1-3 days until the price reaches the mining value or the 100 contracts might be a one-time deal (and the price might go back up - or the manipulators might be scared off by the official anti-manipulation policy and not increase the price).

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October 16, 2014, 02:42:06 AM
 #124

Swaps down to 200.6 TH1. Swap rate is dropping.

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October 16, 2014, 04:51:27 AM
 #125

So if I borrow TH1 to short it, the day rate that I am paying is the interest rate X the rate I sold the TH1 at?

Anyone have a know exactly what 1 would earn from today until end of contract at current difficulty?

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October 16, 2014, 05:41:00 AM
Last edit: October 16, 2014, 06:37:24 AM by nrd525
 #126

I think the interest depends on the market price of TH1.  Not sure if that is the bid, ask, or last traded. I could be wrong on this!

Shorting it until the last day - you'll earn the price of the contract (minus dividends and swap costs).

...

Outstanding TH1 swaps down to 140.

50 bids at 0.8255
100 bids at 0.82
100 bids at 0.700



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October 16, 2014, 08:20:24 AM
 #127

From what Ive gathered you pay interest every day in the form of TH1. For this you buy small fractions of TH1 every day at current market price.

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October 16, 2014, 03:33:31 PM
 #128

Hmm, if so the price crashing is a good thing.  I just need to figure out how to calculate if I'm better to close it now or hold it to until it expires.


From what Ive gathered you pay interest every day in the form of TH1. For this you buy small fractions of TH1 every day at current market price.

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October 16, 2014, 05:14:44 PM
 #129

As the price will decrease over time so will decrease interest payments.

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October 16, 2014, 06:52:46 PM
 #130

Looks like the swap rate is falling.  There are offers at 0.128% for 30 days that aren't taken.

I wouldn't be surprised to see a price spike at some point. Even if it is irrational.

Shorting it really depends on what is happening with mining. We appear to be having the biggest or second biggest slow down of mining growth.  If we'd be seeing 10% increases, shorting it would be a great deal. If we're seeing 2-4% - not such a good deal and risky as the contract can still be manipulated (Ex. a small increase in its price might not be seen as manipulation if it isn't as protracted as the last one).

Number of TH swaps: 121.

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October 16, 2014, 06:56:20 PM
 #131

Looks like the swap rate is falling.  There are offers at 0.128% for 30 days that aren't taken.

I wouldn't be surprised to see a price spike at some point. Even if it is irrational.

Shorting it really depends on what is happening with mining. We appear to be having the biggest or second biggest slow down of mining growth.  If we'd be seeing 10% increases, shorting it would be a great deal. If we're seeing 2-4% - not such a good deal and risky as the contract can still be manipulated (Ex. a small increase in its price might not be seen as manipulation if it isn't as protracted as the last one).

Number of TH swaps: 121.

What is the expected BTC mined at current rates though?  Link to a good calculator?  I want to figure that out and any increase in difficulty is a bonus.

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October 16, 2014, 07:18:18 PM
Last edit: October 16, 2014, 07:52:24 PM by odolvlobo
 #132

What is the expected BTC mined at current rates though?  Link to a good calculator?  I want to figure that out and any increase in difficulty is a bonus.

This is approximately how much 1 TH/s will mine by 2014/12/15 13:00:00 assuming different rates of increase (except the next one, which is assumed to be about 1%):

Increase Each PeriodTotal Mined
-5%0.87 BTC
0%0.85 BTC
5%0.83 BTC
10%0.81 BTC
15%0.79 BTC
20%0.77 BTC

Here is a spreadsheet you can use to calculate the value:
https://docs.google.com/spreadsheet/ccc?key=0AllWdSPlWdvydEUwc19xWWVqa2x6eXd3V3NKV2NmZHc&usp=sharing

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October 16, 2014, 07:48:24 PM
 #133

How do I put in a bid to close out my short position?  To I put in a margin buy or do I go to the exchange and put in a regular buy?

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October 16, 2014, 07:56:44 PM
 #134

How do I put in a bid to close out my short position?  To I put in a margin buy or do I go to the exchange and put in a regular buy?

Do a margin buy or click on Close to the right of the position info

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October 16, 2014, 09:42:36 PM
 #135

How do I put in a bid to close out my short position?  To I put in a margin buy or do I go to the exchange and put in a regular buy?

Do a margin buy or click on Close to the right of the position info

Close would do it at market though right?

I am up 22% right now but I can't decide if I am better off closing now or waiting until contract ends.

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October 16, 2014, 11:28:55 PM
 #136

If you close, you can put your money into other swaps. Though this is only really useful if you want to lend out USD at 0.08%/day and have your funds in USD.  If your TH1 short is in profit, you'll get BTC for it.

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October 24, 2014, 02:40:59 AM
 #137

TH1 price is up slightly over the past 6 days.   The mining and interest value is currently around 0.73 BTC (1% difficulty increase, 3% pool fee, 0.1% swaps).  So it shouldn't be trading at 0.87.

And there are 200 bids over 0.8 BTC. That is crazy.  The 200 bids in the 0.7 to 0.73 range make sense as that is what it is actually worth.

Number of swaps is down to 62.

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October 24, 2014, 04:12:11 AM
 #138

TH1 price is up slightly over the past 6 days.   The mining and interest value is currently around 0.73 BTC (1% difficulty increase, 3% pool fee, 0.1% swaps).  So it shouldn't be trading at 0.87.

And there are 200 bids over 0.8 BTC. That is crazy.  The 200 bids in the 0.7 to 0.73 range make sense as that is what it is actually worth.

Number of swaps is down to 62.

I was thinking the same thing.  I am still a little hesitant until I can borrow TH1 BTC for 30 days that crosses over the Dec 1 threshold so I don't have to worry about renewing my rates.

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October 24, 2014, 08:20:06 AM
 #139

TH1 price is up slightly over the past 6 days.   The mining and interest value is currently around 0.73 BTC (1% difficulty increase, 3% pool fee, 0.1% swaps).  So it shouldn't be trading at 0.87.

And there are 200 bids over 0.8 BTC. That is crazy.  The 200 bids in the 0.7 to 0.73 range make sense as that is what it is actually worth.

Number of swaps is down to 62.

I was thinking the same thing.  I am still a little hesitant until I can borrow TH1 BTC for 30 days that crosses over the Dec 1 threshold so I don't have to worry about renewing my rates.

Why Dec 1, its 15.12.2014 when the contract expires ?

Not much volume being traded and someone is closing old short position (60THs), therefore price has some support for now.

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October 24, 2014, 04:04:29 PM
 #140

Oops, I meant Dec 15.


TH1 price is up slightly over the past 6 days.   The mining and interest value is currently around 0.73 BTC (1% difficulty increase, 3% pool fee, 0.1% swaps).  So it shouldn't be trading at 0.87.

And there are 200 bids over 0.8 BTC. That is crazy.  The 200 bids in the 0.7 to 0.73 range make sense as that is what it is actually worth.

Number of swaps is down to 62.

I was thinking the same thing.  I am still a little hesitant until I can borrow TH1 BTC for 30 days that crosses over the Dec 1 threshold so I don't have to worry about renewing my rates.

Why Dec 1, its 15.12.2014 when the contract expires ?

Not much volume being traded and someone is closing old short position (60THs), therefore price has some support for now.

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October 24, 2014, 07:27:45 PM
 #141

Shorting is up from 62 swaps to 82.

I think there is a chance that the market could be manipulated (or just naturally act weird) again.  Small amounts of manipulation (ex. maintaining a 10-15% price premium over the mining value) probably won't cause Bitfinex to act.

I've been waiting 8 days to hear from Bitfinex regarding my support ticket for a refund.  No response.  Typically they are a lot faster.

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October 24, 2014, 07:39:15 PM
 #142

Shorting is up from 62 swaps to 82.

I think there is a chance that the market could be manipulated (or just naturally act weird) again.  Small amounts of manipulation (ex. maintaining a 10-15% price premium over the mining value) probably won't cause Bitfinex to act.

I've been waiting 8 days to hear from Bitfinex regarding my support ticket for a refund.  No response.  Typically they are a lot faster.

We are only 20 days until you can lock in your swap rate until it expires.  If the prices are still this high in 20 days and average priced swaps are still available like now, expect the price to plummet.

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October 24, 2014, 09:03:22 PM
 #143

Having not heard back from Bitfinex for 9 days, I'm launching a signature campaign.  I encourage everyone else who lost money (or anyone who has enjoyed my posts) to join me in asking Bitfinex to do the right thing and fix this mess.


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October 25, 2014, 10:25:32 AM
 #144

Having not heard back from Bitfinex for 9 days, I'm launching a signature campaign.  I encourage everyone else who lost money (or anyone who has enjoyed my posts) to join me in asking Bitfinex to do the right thing and fix this mess.



me too nothing, i writed ton of mails.
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October 25, 2014, 11:19:10 PM
 #145

Currently low swap rate (0.1364%), low outstanding swaps (102), but no TH1 swap offers.  So who knows what will happen to the swap rate.

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October 26, 2014, 09:23:39 PM
Last edit: October 26, 2014, 09:41:34 PM by nrd525
 #146

Price falls to 0.73 (down from 0.82) on a 24 hour volume of only 23.  Someone must have pulled the two 100 walls (or most of them).   Swaps increase to 116.   2.2 TH1 swap available.

I was thinking about shorting last night, but there wasn't any swap available.

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October 27, 2014, 04:57:37 PM
 #147

Price falls to 0.73 (down from 0.82) on a 24 hour volume of only 23.  Someone must have pulled the two 100 walls (or most of them).   Swaps increase to 116.   2.2 TH1 swap available.

I was thinking about shorting last night, but there wasn't any swap available.

they will not refund our losses i think, they ignoring us
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October 29, 2014, 06:33:58 PM
 #148

Bitfinex has stopped listing the number of outstanding TH1 swaps on the statistics page.

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October 30, 2014, 04:22:02 PM
 #149

Hey guys, just to let you know that I've placed a hidden order to close out by bunch of position at a "not-too-distant" price (from current's 0.635)

One thing, though, I'd like to know, is that what would happen if the BTC balance to reach negative with all the negative position "profit" (the expenses of Shorting TH1), while having a positive P/L
eg BTC balance -1, P/L 100.

The Unrealized P/L would be counted as "Net Value" thus accounting for margin or we got more rules on closing of position?

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October 30, 2014, 04:24:27 PM
 #150

Price falls to 0.73 (down from 0.82) on a 24 hour volume of only 23.  Someone must have pulled the two 100 walls (or most of them).   Swaps increase to 116.   2.2 TH1 swap available.

I was thinking about shorting last night, but there wasn't any swap available.

they will not refund our losses i think, they ignoring us
unclescrooge, from what I've heard in Bitcoin meetups, online and my experience is a hermit guy.

Pretty much hidden and no talking.

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October 30, 2014, 08:27:53 PM
 #151

Hey guys, just to let you know that I've placed a hidden order to close out by bunch of position at a "not-too-distant" price (from current's 0.635)

One thing, though, I'd like to know, is that what would happen if the BTC balance to reach negative with all the negative position "profit" (the expenses of Shorting TH1), while having a positive P/L
eg BTC balance -1, P/L 100.

The Unrealized P/L would be counted as "Net Value" thus accounting for margin or we got more rules on closing of position?

I think it should count as net value, but I am not an expert.   I currently don't have any active margin positions.  If you do have a short position, you should be able to see whether the Unrealized P/L is included in the Net Value of your own position by doing some math.


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November 09, 2014, 09:08:54 PM
 #152

I wrote up my story of how I lost money trying to expose the manipulation of the TH1 contract.
Exposing Manipulation

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November 11, 2014, 11:46:49 PM
 #153

At 0.42 BTC, it looks like the contract might actually be trading without a premium (or the premium is down from 10-15% to only 0-2%)!  With 5% difficulty increase and a 0.2% swap rate - this is about breaking even.  Maybe people are expecting a greater than 5% difficulty increase as I've seen some rumors of new hardware in the works (though I really have no idea if any of it will arrive within the next several weeks).  

Swap is still very hard to get.

There is a very interesting 300 TH1 bid wall at 0.4 BTC. I highly doubt that it will stay up.  When will it move?  Maybe some people think it will move and then the price will collapse. But that would be ignoring fundamentals which in this case are a lot easier to measure than they are for BTC/USD.

Things will get very interesting if the 300 TH1 bid wall disappears.  After that, there is only 1-2 TH1 of bids down to 0.01 BTC! 

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November 12, 2014, 03:05:34 PM
 #154

I wrote up my story of how I lost money trying to expose the manipulation of the TH1 contract.
Exposing Manipulation
Manipulation is just big players making moves.
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November 12, 2014, 06:07:39 PM
 #155

In the BTC/USD market, big players can counter each other. They cannot do that in the TH1 market.

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November 15, 2014, 10:00:38 PM
Last edit: November 15, 2014, 10:41:38 PM by nrd525
 #156

At 0.34 BTC, the TH1 contract might actually be under-valued (assuming 3% difficulty increase).  Of course the difficulty could increase by more than 3% in the second increase.  And 0.34 BTC might be below market price (there isn't much trading at this price).


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November 17, 2014, 02:11:02 AM
 #157

You can finally borrow swap for the entire period of the contract. So shorting is relatively safe.  On the other hand, there isn't much left to short.

Side note: if margin sell is saying 0.3555 and margin buy is 0.3775 - and there haven't been any trades executed at either price, and it isn't a current bid or ask.  What does that mean?  Is it an indication of a hidden order?

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December 14, 2014, 11:22:13 PM
Last edit: December 14, 2014, 11:39:36 PM by nrd525
 #158

Someone has bid 0.015 for 250 contracts (and forgot to remove it?)- which is 40% over expected mining value (as there are 13-14 hours of mining time left).  However all the TH1 swap is gone.

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December 15, 2014, 08:13:41 PM
 #159

Now that the whole TH1 contract fiasco is over.

Ways in which BFX profited from the manipulation of the TH1 contract at the expense of their customers

1. The price premium that was caused by manipulation and the increased volatility due to market manipulation increased the TH1BTC swap rate to two or more times what it should have been.  This doubled the amount of swap fees.

2. The price premium increased the fees collected on trades.

3. (optional)  The price premium may have allowed Bitfinex to sell contracts to the market maker at a higher price than they cost.  The identity of the market maker is unknown and given the manipulation in the market and the way in which contracts were randomly issued this is disturbing.

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December 15, 2014, 11:17:11 PM
 #160

There is no evidence of manipulation beyond a short squeeze, which is circumstantial at best. The short squeeze in the last 30 days that people were warning about never materialized.

I think the problems in the TH1BTC market were mostly due to swap liquidity. There was a severe lack of swaps for the amount of shorting that was being attempted.

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December 16, 2014, 03:52:17 AM
 #161

You obviously haven't read my argument about how the market was imperfect, or you do not understand it.

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December 16, 2014, 04:47:37 PM
 #162

You obviously haven't read my argument about how the market was imperfect, or you do not understand it.

I agree with your assessments of the market's imperfections. I don't agree that there was any manipulation.

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December 16, 2014, 11:00:23 PM
 #163

That is true, we don't know whether the outcome of inflated TH1 prices was intentional or not.  I guess from my point of view it doesn't really matter as you need to assume the worst (if the worst case leads to a large profit for someone and isn't too hard to do).  It could have been one person, or it could have just been a trend that got worse and worse (for instance a group of people might have felt that mining difficulty was not going to increase by as much as in the past - they were partially right, but we still saw an average of 5% difficulty increases over the contract's lifetime).

Though it is interesting that once BFX said they wouldn't allow anyone to manipulate the market that the price plunged so dramatically (30-40% in 1-2 days if I remember correctly).  Adding 100 swaps helped, but I don't think that was enough to correct the premium (and swaps had been added before without such a large correction).

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