TH1BTC Speculation Thread - Bitfinex Cloud Mining Contract

[twentyseventy]

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

[greyphilosophy]

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.

[odolvlobo]

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?

[greyphilosophy]

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.

[nrd525]

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.

[twentyseventy]

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.

[nrd525]

[nrd525]

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.

[nrd525]

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.

[lg1500]

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.

[nrd525]

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.

[lg1500]

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

[lg1500]

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,

[nrd525]

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.

[nrd525]

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.

[nrd525]

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?

[lg1500]

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

[nrd525]

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.

[nrd525]

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.

[lg1500]

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