sklut (u/sklut) - Readit News

sklut commented on Which Categories of Seed Startups Are Thriving? Which Aren't? tomtunguz.com/which-categ... · Posted by u/rmason

seibelj · 7 years ago

Blockchain allows protocols for finance. Derivative contracts like perpetual futures are inherently better than old-school futures. The innovation is much more rapid. Building a new exchange becomes permissionless. Assets can flow from old exchanges to new, or be moved around to many rapidly. All of this is simply better than the current exchange situation - 24/7 trading, low fees, rapid innovation, easy capital formation. Finance will move to the crypto rails because it’s better.

sklut · 7 years ago

How is a perpetual futures contract inherently better than "old-school futures"? It is my understanding what cyrpto calls a perpetual future _isn't_ a future which makes them difficult to compare. I'm reading this comment as if perpetual futures are going to replace our current futures system somehow, and I don't see this possibility.

Don't we have 24/7 trading without the block chain? And low fees?

It appears all the many of these benefits you mention are for those just transacting in a crypto currency, and not for the other 99% of finance transacting in other currencies (and physical goods).

sklut commented on Lessons on Bubbles from Bitcoin bloomberg.com/view/articl... · Posted by u/kgwgk

nosuchthing · 8 years ago

The Bitmex and Bitfinex futures markets are settled in BTC and it's been blatantly clear that someone (most likely the exchange operators) are consistently manipulating the futures market (most likely to wipe out margin traders who don't know better) with short squeezes that return back to the norm within hours.

https://i.imgur.com/LpgnksQ.png

CBOE and CME futures being cash settled is a joke, and removes any incentive for the risk associated with the long position actually acquiring BTC, further proving the large traders just want to play with the tool for speculative market volatility and not actually facilitate using or acquiring the asset itself.

https://medium.com/@bitfinexed/latest

sklut · 8 years ago

"CBOE and CME futures being cash settled in a joke"

How do you mean? The CME S&P e-mini is cash settled. In fact all of the equity indexes futures products are cash settled.

"...and removes any incentive for the risk associated with the long position actually acquiring BTC"

They contract settles to a VWAP of physical transactions of BTC and converges to this point at settlement. It currently has a bid/ask price that surrounds the bid/ask of Gdax. I would say the risk associated with the futures contract is... effectively the exact same as physical holdings, less the risk you have of keeping large amounts of USD or physical coins at the exchange.

"further proving the large traders just want to play with the tool for speculative market volatility and not actually facilitate using or acquiring the asset itself"

I think your logic up to this point is flawed and that the conclusion you are attempting to draw is both baseless and lacks a point. If the purpose of "large traders" was to just "play" for speculative market volatility then... so what? I suspect you don't think that markets require speculation in order to become liquid and fair, so perhaps we live in different worlds.

Additionally, "not actually facilitate using or acquiring the asset itself" -- just for giggles: how many people that you know that screw around in the coin space are actually there to _use_ the coins as currency? Effectively everyone I know is just trying to ride the rollercoaster and make a profit and don't really care about the far off future of the stuff.

sklut commented on A Tiny Hedge Fund Made 8,600% on a Vix Bet bloomberg.com/news/articl... · Posted by u/apesti

sklut · 8 years ago

I feel like a lot of the comments here are about how volatility of course will go up at some point and these guys had lucky timing, or about the market in general. But there's interesting tidbits to the whole thing beyond this.

What's interesting about this fund's particular bet isn't that they we're _right_ about the market but they correctly bet that the structural ability of the ETN/ETF product to properly hedge the risk associated with the fund goals was either too difficult or in certain events literally impossible. And that a certain event (like even what most would consider right now as a regular correction) would blow up said fund. In fact, even bastard cousins of the fund that are meant to do the exact opposite thing in these conditions may also feel the same deathknell (https://finance.google.com/finance?q=xiv).

And just to look a little deeper into the bet itself... They were using options (derivatives) on a fund (a derivative) using swaps (derivatives) linked to the VIX (a derivative) which is a measure of volatility of an index (a derivative) of the S&P components.

You too can replicate these winnings by just finding a niche mis-pricing on a derivative of a derivative of a derivative of a derivative of a derivative of a derivative!

sklut commented on Researchers find that one person likely drove Bitcoin from $150 to $1,000 techcrunch.com/2018/01/15... · Posted by u/middle1

gtcode · 8 years ago

Bitcoin topped out as soon as the futures went live. Massive contango on a regulated futures market may have been a factor in "reeling in" price. The spot market is so thin that it didn't seem to take much open interest in the futs to whip the underlying.

It's conceivable that some spot exchanges are or were still from 2017 to now, either malicious and/or incompetent, which would facilitate the continuation of such behavior, likely by more players than one or two.

sklut · 8 years ago

On contango: I would not call what the futures market is experiencing "massive" contango. There is a very slight premium to further dated futures ($35/btc Feb over Jan, and $5 Mar over Feb contracts on CME), but this is very normal for a commodity and logically in place for exchange/spot holding risk. I would call the average settlements over the past month of futures being listed very normal contango. And I don't think the contango itself had anything to do with "reeling in" price. The futures finally being listed perhaps.

"The spot market is so thin" I also think is incorrect. GDAX is normally 0.01 USD wide (albeit for small amounts) and often-times under $1 wide for many BTC. I would call the spot market very thick, if anything. You can get off what appears to be very large amounts of BTC with minimal slippage most times of the day.

"didn't seem to take much open interest in the futs to whip the underlying" -- are you saying a futures move would lead the market? I respectfully disagree. All the entities I know price futs from spot and are generally putting on the arb in this order, not the other way around.