ETF, Bitcoin and the risk of manipulation with derivates - page 2.

deisik

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Quote from: aencarnaci on October 01, 2018, 11:54:00 AM

I know derivatives are horrible and it looks scary but bitcoin is barely getting into ETF market, if bitcoin gets accepted as an ETF which I think is still quite far away than there is still a long way to derivatives as well.

Unless Bitcoin proves itself as an established means of payment, all its derivatives will be irrelevant. Derivatives are deriving their value from real value of an asset. It can be said that they are exploiting this value or even abusing it (see oil as an example). But if there is no such value as is in case of Bitcoin (well, at least not to a required degree), its derivatives will have no such support of the solid underlying asset. You can build a home only on a firm base as otherwise it will be a house of cards built on another house of cards. Besides, as others and I have previously said on numerous occasions, cash-settled derivatives are not an instrument of influencing the price of the underlying asset simply because there is no underlying asset, only its price across the market

In other words, can the tail wag the dog if this tail belongs to another dog?

aencarnaci

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I know derivatives are horrible and it looks scary but bitcoin is barely getting into ETF market, if bitcoin gets accepted as an ETF which I think is still quite far away than there is still a long way to derivatives as well.

Let's wait out until bitcoin gets accepted as ETF let alone derivatives before we overreact on the risks of manipulation.
But, if you are worrying about the manipulation think of it this way we already have people (whales) who manipulate the market buying bitcoin or selling it whereas this would be derivative that will not be buying or selling directly and just wager on which direction bitcoin will go without actually buying bitcoin.

esetop01tryba

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https://www.empirehotels.io

Perhaps the post of a positive decision in bitcoin will come a lot of money but it does not hurt him as bitcoin is not subject to the state. The only downside is that the US government can buy most of the assets !

deisik

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Quote from: talkbitcoin on October 01, 2018, 06:18:52 AM

Quote from: BitHodler on September 29, 2018, 07:25:27 PM

On the other hand, people start to worry about manipulation with financial instruments but completely forget that the market has always been subject to manipulation, especially in the early days.

i think a part of this fear is about the big players entering the market. we are talking about wall street veterans who only care about making money who also have a lot of experience in the market and on top of that have access to media to manipulate the price if they wish to.
we have seen small examples before but if it becomes a serious thing we may end up with a terrible market at least for a year where they can pump and dump bitcoin!

They are the wolves of Wall Street

And that is likely the reason why they are not getting their feet wet on Bitcoin cause they firmly know their limits. In other words, Bitcoin is so much speculative, dancing upon nothing, figuratively speaking, that their tricks won't work as they work with regular goods and commodities like oil and to a lesser degree gold. People will just keep their bitcoins tight no matter what, and these dudes will be losing money, and that's why they won't losing it. Besides, cash-settled futures are meaningless for big-time manipulations, everyone knows that and doesn't give a fuck

Siren

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Quote from: davis196 on September 30, 2018, 01:30:06 AM

Bitcoin won't be approved as an ETF anyway,so your theory is pointless.
Bitcoin futures trading is active on CBOE and CME for about 9 months.Do you see any big price manipulations?
I'm not a fan of bitcoin futures trading,but when you post your theories just put some real life example.
If btc price is really manipulated,why it was approved for future contracts trading?

Agreed on this mate,since i am in the same point that ETF will never become reality and always be denied

But about manipulation,maybe theres a possibilities mate,since whales are holding tons of bitcoins in their wallet and if some of them will make one stand,so price will be easily goes ups and downs and may mislead investors to become a victims

talkbitcoin

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All I know is that I know nothing.

Quote from: BitHodler on September 29, 2018, 07:25:27 PM

On the other hand, people start to worry about manipulation with financial instruments but completely forget that the market has always been subject to manipulation, especially in the early days.

i think a part of this fear is about the big players entering the market. we are talking about wall street veterans who only care about making money who also have a lot of experience in the market and on top of that have access to media to manipulate the price if they wish to.
we have seen small examples before but if it becomes a serious thing we may end up with a terrible market at least for a year where they can pump and dump bitcoin!

stompix

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Blackjack.fun

Quote from: ForkThis on September 29, 2018, 07:03:54 PM

With bitcoin or other coins you don´t have to bribe, you just buy and rise the price or sell if you need it to be low and then you make your profit with the leverage of the derivatives. e.g. Raising the price of bitcoin on a certain day would cost 1 million. If you used leveraged derivatives you will get x5 the increase and that can be more than the million you´d put in.

There is a tiny problem, you're not alone in this market.
So when you decided to buy so you could raise the price you might trigger a selling wave from somebody who wants to short the coin, just last week we had an example of this strategy.

And the same is for you betting on the RS and bribing a few players from the other team and the referee. You can't be sure that your own team hasn't been bribed and somebody is willing to spend twice as much on this as you;) ...there's always a bigger fish... Grin

deisik

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Quote from: ForkThis on September 29, 2018, 07:03:54 PM

There are many news about the ETFs proposals that are being discussed by the US SEC. The creation of these will have a strong influence in Bitcoin and many people said that the futures over bitcoin could potentially tame Bitcoin and ETFs may have an even stronger effect.

For me is easier to understand if I use a football comparison: Let´s say that I bet 4 million on a game, so if the Red Team wins, I will make 4 millions of profit. The manipulation could occur if buying the referee and perhaps a few key players only costs 1 million. So:

- I bet 4 million.
- I spend 1 million in bribes.
- I get 8 million once I win.

With bitcoin or other coins you don´t have to bribe, you just buy and rise the price or sell if you need it to be low and then you make your profit with the leverage of the derivatives. e.g. Raising the price of bitcoin on a certain day would cost 1 million. If you used leveraged derivatives you will get x5 the increase and that can be more than the million you´d put in.

All proposals have been rejected so far

I know that there's always a first time for everything, but the chances for the "first time" this time or in the foreseeable future are pretty pathetic. It is not like tossing a coin when you intuitively* expect that the longer you see only one side, say, tails, the higher are your chances to see the other side, i.e. heads. Even if that were true (which it is not), it wouldn't work in this case as the SEC won't accept Bitcoin ETF proposal due to Bitcoin's purely speculative nature. Adding a layer of derivatives will only make this speculation even more insane than it already is

*some jerk will definitely pop up here and say that your chances remain the same no matter how long you toss the coin

xtrump101

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$onion

base on your premise and refereed article all of those are centralize kind of trading including how bitcoin was traded today, so until bitcoin and alt coins moves to decentralize state of trade, there will be manipulation at some point.. today many developers are shifting to decentralize not that just in exchanges, and they are growing in numbers , and until we dont yet see it now (total decentralization) progress of adoption will be so slow.

davis196

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Bitcoin won't be approved as an ETF anyway,so your theory is pointless.
Bitcoin futures trading is active on CBOE and CME for about 9 months.Do you see any big price manipulations?
I'm not a fan of bitcoin futures trading,but when you post your theories just put some real life example.
If btc price is really manipulated,why it was approved for future contracts trading?

figmentofmyass

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Quote from: BitHodler on September 29, 2018, 07:25:27 PM

ETFs that are backed with the underlying asset stimulate long activity rather than short activity

i wouldn't say that. brokers are free to loan ETF shares for short selling. it happens in other markets everyday.

also, shares can be issued or redeemed for bitcoins. just as bitcoins are bought, put in custody and exchanged for ETF shares, the shares can be redeemed for bitcoins and those BTC sold on the spot market.

Quote from: BitHodler on September 29, 2018, 07:25:27 PM

but the futures markets could turn out to be an obstacle, but the volumes have to pick up significantly before that happens.

i think the lack of physical settlement leaves the futures markets completely following the spot market, rather than leading it. the volume doesn't matter if the market can't be used to buy/sell real BTC. real supply and demand meets on spot and OTC order books.

oriontab

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Every market is manipulated,even the highly regulated ones such as stocks and shares.the introduction of ETF will only it less obvious as the players are more. Imagine watching a football match with just 2 players on each side, the ball will move faster,you could easily score a goal. Now imagine same pitch with 20 players on each team, the ball will hardly move in any direction and will take a lot of effort to get things going in a certain direction .

BitHodler

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ETFs that are backed with the underlying asset stimulate long activity rather than short activity, but the futures markets could turn out to be an obstacle, but the volumes have to pick up significantly before that happens.

On the other hand, people start to worry about manipulation with financial instruments but completely forget that the market has always been subject to manipulation, especially in the early days.

I think that with more institutions entering crypto, the usual whales will face tough competition which is in the benefit of the market in my opinion. It results in more overall stability and less impulsive pumps and dumps.

Let's be honest, has the market ever respected support levels like how it does so this year?

ForkThis

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There are many news about the ETFs proposals that are being discussed by the US SEC. The creation of these will have a strong influence in Bitcoin and many people said that the futures over bitcoin could potentially tame Bitcoin and ETFs may have an even stronger effect.

For me is easier to understand if I use a football comparison: Let´s say that I bet 4 million on a game, so if the Red Team wins, I will make 4 millions of profit. The manipulation could occur if buying the referee and perhaps a few key players only costs 1 million. So:

- I bet 4 million.
- I spend 1 million in bribes.
- I get 8 million once I win.

With bitcoin or other coins you don´t have to bribe, you just buy and rise the price or sell if you need it to be low and then you make your profit with the leverage of the derivatives. e.g. Raising the price of bitcoin on a certain day would cost 1 million. If you used leveraged derivatives you will get x5 the increase and that can be more than the million you´d put in.

There is a long article here about the topic, and some historical references here and here. The references date back to BC.

"Jumping forward to Mesopotamia in the late 1700s B.C., trade and commodity security became dictated by rulers’ codes, which functioned as some of the first recorded contracts. Like those by Hammurabi of Babylon, "

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