
Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts - mancerayder
https://www.bloomberg.com/news/articles/2017-12-18/bitcoin-climbs-as-futures-debut-fails-to-ignite-attack-by-shorts
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verroq
You’ve been able to short bitcoin on okcoin, bitfinex, bitmex either via
margin or through futures products for years.

Secondly, newly launched futures products will have very thin liquidity due to
the lack of market makers. There is no way a short/long position on CME will
move the market in a meaningful way for a while.

I wish Bloomberg et al will stop repeating this “you can’t short” meme because
it you can and you could for years.

~~~
readhn
Theoretically. In reality - real traders couldn't even trade this thing as
there was no infrastructure and too much system risk. If I fund my speculative
100-500k trading account who guarantees I'll be able to close out and cash out
when I want? Noone could so far. Futures market will add much needed liquidity
and confidence that one could actually trade this thing actively and with
apropreate position sizes.

So far all BTC trading was done mostly by hobbyists who have no clue how
markets function.

~~~
zone411
100% correct. It's painful to see how little otherwise intelligent tech people
know about investing...

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jusonchan
So what do you guys think of this?

I believe all BTC trading spikes are driven by some of the existing owners
swapping coins and cash every now and then to keep the trading volume high. It
is in their best interest to get the prices bounce back higher whenever it
goes down.

Once the price is manipulated higher, they can sell and keep the cash when
someone who thought BTC is the next "I-Dont-Know-What-It-Is-But-Its-Going-
Higher-Everyday" buys it. Since there are no regulators to protect against
market manipulation, it's a fairly easy thing to do 'legally'.

As per GDAX you only need 10s of millions of dollars worth of coins to
manipulate and mint money on this. Ordinary folks can't do it, but those who
have been holding a few thousand or tens of thousands of coins can easily do
this. The bitcoin billionaire brothers for example can do this. Buy every low
priced limit order until it hits the price they want and then sell it off
based on the frenzy buying on the back of the "always-bouncing-back-safe-
harbor-currency".

Rinse and repeat every time price takes a dip.

I hope at some point someone will step into regulate things around bitcoin so
that the real market demand will determine its prices. I read an article that
people are mortgaging their homes to buy BTC.

If nothing changes, we might be looking at a sequel of the movie "The Big
Short"

~~~
cryptodogemoon
Cryptocoin exchange rates are largely defined by pump and dump whale gangs
spreading rumors and luring in novice investors.

[0]
[https://news.ycombinator.com/item?id=7126153](https://news.ycombinator.com/item?id=7126153)

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empath75
You would have to be nuts to short when there's an exchange printing billions
of dollars of unbacked tokens they can use to drive up the price at will.

If you want to short cryptocurrency, short tethers.

~~~
bufferoverflow
I'm consistently confused as to who is buying all the tethers in such crazy
amounts. It's not like they are appreciating in value. They are sort-of pegged
to the dollar, but why not just hold the real dollars?

~~~
Scott_Sanderson
No one is buying those tethers. Bitfinex is printing them and using them on
their own exchange's margin trading market. They use it to wash trade the
price up or down as desired. There is some evidence they have been wash
trading down to trigger stop loss sell orders and buying the cheap coins. Then
they wash trade up and sell.

~~~
bufferoverflow
That answer doesn't make any sense. Bitfinex is buying bitcoins from itself?

Could you please explain in more detail?

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jonknee
People get upset when you print USD, so Bitfinex instead creates USDT out of
thin air and then uses it to buy BTC on its exchange. This would be OK if the
Tether was actually backed by USD reserves dollar for dollar, but there is
zero evidence that this is the case.

~~~
bufferoverflow
I understand that, but my question is why would anyone buy USDTs in such
quantities? The total is now close to a billion dollars, as far as I
understand.

~~~
jonknee
Exchanges make it cheaper/easier because they're all light on USD and
banking/tax rules make all sorts of sketchy characters want to avoid USD.
There are also probably a lot of people who don't know any better and think
that it's as safe as USD.

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nerdponx
Could someone with some forex knowledge explain how cash-settled futures do
and don't affect spot markets?

~~~
pash
I and some others explained this in another thread [0] about a week ago. The
basic explanation is that because of a simple arbitrage relationship between
futures and spot, prices in these markets are tightly linked regardless of how
the futures contracts are settled.

0\. Read the replies to this comment:
[https://news.ycombinator.com/item?id=15895477](https://news.ycombinator.com/item?id=15895477)

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rb808
I dont think there are any experienced shorters sane enough to short something
with this much upward momentum. Once we get a decent downtrend though watch
out.

~~~
zone411
That's not how it works... If you believe that "upward momentum" or
"downtrend" mean something, why don't you go long now and sell at the first
signs of weakness? Easy money, right? In reality, there are no simple and
exploitable rules like this.

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switch007
Literally drops after the article is published. From ~19,338 to now ~18,469

~~~
deepsun
Authors probably shorted bitcoin before publishing the article.

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qubex
I have to admit that I'm quite surprised by this, I had expected that the
debut of futures would have caused an almost-instant disruption of supply and
demand.

Still, any time now...

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briatx
The problem is that all of the Bitcoin futures are cash settled contracts.

This means that they are not resolved with delivery of the commodity and have
no direct influence on the underlying markets.

~~~
notyourday
Today BTC futures are gambling.

In China based on Bet365 data the most popular wager is direction of the
market going i.e. up/down.

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grandalf
Short term betting (for or against) Bitcoin is unlikely to result in much
profit.

~~~
0003
It is not so much a directional play as it is a force for arbitrage
opportunities.

~~~
grandalf
True, but those arbitrage opportunities will stabilize the price and make
other similar opportunities less profitable. I suspect that the real reason
these haven't all been ironed out (exploited already) is because Bitcoin
exchanges lack the infrastructure guarantee that transactions close when they
are expected to, and thus the fee levels wash out much of the arbitrage (for
now). But arbitrageurs operating outside the exchanges can use this to their
advantage and probably harvest a bit of profit on the chaos for the time
being.

~~~
0003
Yeah - exactly.

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readhn
What goes up must come down. What goes up fast and hard usually falls faster
and harder. Market 101.

~~~
cgmg
That's not how it works.

~~~
kypro
What do you disagree with?

~~~
yeahsure
When was the last time gold was traded for < $10? Not everything that goes up
is surely to go down. At least not in a lifetime. Nobody really knows what's
going to happen, that's market 101.

~~~
kypro
Everything goes to 0 eventually. The statement is true. Gold is obviously much
less likely to go to 0 unless the human race is either on the brink of
extinction or extinct, but when you're talking about stocks or currencies a
huge percentage will go to zero in less than human lifespan.

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jaxondu
Did not read the article, looks like someone is writing to boost the rise. As
of this writing BTC is about $18.6k. It was hovering around $19.5k this past
weekend.

~~~
659087
This seems to be the case with most of the articles about Bitcoin. I suspect
there are a number of large holders and exchanges paying PR firms to get
stories like this published/upvoted/etc and keep the train going.

~~~
mancerayder
I don't view Bloomberg as a paid-to-write-articles-to-sell type of place
[edit: other than advertising space]. Otherwise no one would be taking them
seriously, least of all financial professionals sitting in front of their
expensive terminals.

Call me skeptical about the alleged claims about Bloomberg's motives.

Also the article doesn't contain mind-blowing information, it's just pointing
out that shorting isn't happening yet.

~~~
659087
I'm not suggesting Bloomberg is accepting money, but individual writers would
be a much softer target.

It's also possible that the writers are invested in Bitcoin themselves.

~~~
mancerayder
Anything is possible, but an accusation of bad faith requires more than the
off chance that the accuser is correct. Some argumentative support for the
accusation, for example.

