Totally confused with swaps.

[mmortal03]

It seems not a good return, 100 coins to make 0.2 coins per day... if you use those coins to buy miners, only 40 coins could make you 0.2 coins per day

But those 40 BTC are then gone, and may never see ROI let alone any profit. The 100BTC (if he's a holder anyway) are better working for him than sitting in some dumb safe wallet.

Don't forget lending is not risk free like keeping coins in the safe. If market moves a lot there might not be enough depth to cover all margin calls, and you might loose $. There's also the risk of exchange going belly up and you loose ALL your coins, like MtGox BitFloor etc....

It's "lose", not "loose". That being said, thank you for all the info you have provided in this thread!

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[sgbett]

TL;DR lots of USD swaps (longs) means a lot of people holding BTC with borrowed money in hopes that BTC will go up so they can sell and pay back the $$$. But they're paying interest daily, and if market goes down too much they might have to sell their BTC before loosing everything, or if it goes down too much the BTC might be sold automatically by exchange in a margin call. Which might cause a domino effect. Price falls, person 1 gets margin called and his coins are sold on the market, causing the price to drop even more, now person 2 gets margin called and now his coins are market sold driving the price even further down now person 3 is in trouble etc...

BTC swaps  (shorts) are the other way around, people borrowed coins, sell right away and sit on fiat. Eventually they have to buy the coins to give them back (close their short). They obviously hope to rebuy at a lower price. You borrowed a coin from me at $1000, price goes up to $5000 but i don't care and want my coin back, so you're forced to buy at the market price. Forcing price up, and possible margin call on other shorts driving the price even higher...

BTC swaps have more than doubled to 18600 from the recent low of ~8500 on 24th October

Historically speaking, it looks like bubble territory for the shorts. Backed up by the fact that longs are at $20m which is a third off the july/august high of $30m when everyone was trying to catch the bottom.

Max pain incoming....

[sbrzol]

Ok,  I made an offer at bitfinex:  100 BTC 0.2% 30 days  , i am curious

I don't know if someone is gonna take that 0.2% (there's a 1'671 BTC at 0.17% right now). But anything below that like 0.16% will do.

Back to reality, now it is only 0.059% and keep going down,  so it is time to cancel my order and withdraw BTC

For me the average rate (last 90 days): 0.0247% is too low

[DaRude]

-Day three btc is at $700. Your equity is at $14.02 ($700-$666RyNinDaCleM share-$19.98three day 1% swap interest), 15% Maintenance Margin means that you need to be at least at $120 (800*15%). But $14.02 < $120 MARGIN CALL!

Shouldn't there be  "you need to be at lest at $105 (700*15%)" ?

Anyways, it was a huge LOL, epic post, thank you for the laughs!

You're correct.

[scarsbergholden]

Ok,  I made an offer at bitfinex:  100 BTC 0.2% 30 days  , i am curious

I don't know if someone is gonna take that 0.2% (there's a 1'671 BTC at 0.17% right now). But anything below that like 0.16% will do.

Back to reality, now it is only 0.059% and keep going down,  so it is time to cancel my order and withdraw BTC

For me the average rate (last 90 days): 0.0247% is too low

That works out to an annual rate of ~9% which is actually very high for even historical standards.

The amount you can earn from bank deposits now is well under .2% today and has been under 1% for many years. Even in the 1990's and the 2000's you could generally not earn over 5% on bank deposits

[DaRude]

Ok,  I made an offer at bitfinex:  100 BTC 0.2% 30 days  , i am curious

I don't know if someone is gonna take that 0.2% (there's a 1'671 BTC at 0.17% right now). But anything below that like 0.16% will do.

Back to reality, now it is only 0.059% and keep going down,  so it is time to cancel my order and withdraw BTC

For me the average rate (last 90 days): 0.0247% is too low

That works out to an annual rate of ~9% which is actually very high for even historical standards.

The amount you can earn from bank deposits now is well under .2% today and has been under 1% for many years. Even in the 1990's and the 2000's you could generally not earn over 5% on bank deposits

You are comparing government insured bank deposits to a bitcoin exchange. At 9% it'll take you ~11yrs to return your investment (without compound) what are the chances that the exchange will still be here 11yrs from now?

[segeln]

Thanks to RyNinDaCleM  and DaRude for your explanation