The problem of holding and volatility.

wangxinxi

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Quote from: arbitrage001 on October 23, 2014, 05:53:42 AM

Quote from: wangxinxi on October 23, 2014, 05:47:37 AM

Quote from: tooil on October 23, 2014, 05:39:48 AM

Quote from: wangxinxi on October 23, 2014, 05:12:00 AM

By trading options, you can also handle the volatility more deliberately.

You need a counter party for the trade.

Only a fool would trade derivative based on bitcoin or short volatility.

Yeah, vanilla options are difficult to find a counter party as the seller bears very high risk. But binary options offer you an easy way to trade volatility. By binary options, I mean exchange traded options with multiple strike prices not the one for betting.

How would a seller price binary option then? The premium would need to be high even for short term binary option, and who is going to buy it?

Pricing of binary options can be done using the Black-Scholes model http://en.wikipedia.org/wiki/Binary_option#Cash-or-nothing_call. Premium depends on many factors including the strike price and volatility. For example, if the current BTC price is 380, I guess the call option with strike price 1000 should be very cheap.

Yeah?

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Quote from: cafucafucafu on October 21, 2014, 08:24:10 AM

How is volatility ever going to be reduced to make bitcoin a viable currency if people keep holding. Holding results in low market volume and thus greater volatility.

It seems like BTC will become Gold 2.0 rather than a currency.

And spending it will make it stable? No. Maybe bitcoin won't ever become a viable currency in the conventional sense, but it can still be a tradeable asset maybe like stocks and shares.

findftp

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Delusional crypto obsessionist

Quote from: cafucafucafu on October 21, 2014, 08:24:10 AM

How is volatility ever going to be reduced to make bitcoin a viable currency if people keep holding. Holding results in low market volume and thus greater volatility.

It seems like BTC will become Gold 2.0 rather than a currency.

I suggest you to sell all your bitcoins to create liquidity for others. Grin

There are enough fractions of bitcoins for every person on earth.

Coinapult

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Our Locks tool mitigates the risk of Bitcoin's price volatility.
You can tie your Bitcoin balance to a range of currencies and assets from within the Coinapult wallet interface.
Behind the scenes we will immediately make the exchange for you, then you are entitled to redeem your Bitcoins at any time, effectively never leaving the Bitcoin ecosystem.

There is a live demo today at 4pm GMT if you are interested: http://goo.gl/wd7DUl

We are also offering Locks as a plugin to other wallet providers to try and help more people into Bitcoin, who would see it as too risky.

arbitrage001

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Quote from: wangxinxi on October 23, 2014, 05:47:37 AM

Quote from: tooil on October 23, 2014, 05:39:48 AM

Quote from: wangxinxi on October 23, 2014, 05:12:00 AM

By trading options, you can also handle the volatility more deliberately.

You need a counter party for the trade.

Only a fool would trade derivative based on bitcoin or short volatility.

Yeah, vanilla options are difficult to find a counter party as the seller bears very high risk. But binary options offer you an easy way to trade volatility. By binary options, I mean exchange traded options with multiple strike prices not the one for betting.

How would a seller price binary option then? The premium would need to be high even for short term binary option, and who is going to buy it?

wangxinxi

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Founder & CEO of Coinut.com, Litecoin Core Dev

Quote from: tooil on October 23, 2014, 05:39:48 AM

Quote from: wangxinxi on October 23, 2014, 05:12:00 AM

By trading options, you can also handle the volatility more deliberately.

You need a counter party for the trade.

Only a fool would trade derivative based on bitcoin or short volatility.

Yeah, vanilla options are difficult to find a counter party as the seller bears very high risk. But binary options offer you an easy way to trade volatility. By binary options, I mean exchange traded options with multiple strike prices not the one for betting.

tooil

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Quote from: wangxinxi on October 23, 2014, 05:12:00 AM

By trading options, you can also handle the volatility more deliberately.

You need a counter party for the trade.

Only a fool would trade derivative based on bitcoin or short volatility.

wangxinxi

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Activity: 826

Merit: 1000

Founder & CEO of Coinut.com, Litecoin Core Dev

By trading options, you can also handle the volatility more deliberately.

karma9

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Quote from: Keyara on October 21, 2014, 09:35:01 AM

Volatility will never go away for currency such as bitcoin.

Reaching consensus on price across all countries and various market participants just isn't possible.

this is true.
everything with fixed/known supply is volatile.
bitcoin behaves more like a commodity, not a developed currency in traditional sense.

however, with lots of users/speculators, this volatility is reduced and you can get used to it just as you're to changing gas prices at the pump.

not a problem, right?

wangxinxi

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Derivatives can help stabilise the market.

odolvlobo

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Quote from: cafucafucafu on October 21, 2014, 08:24:10 AM

Holding results in low market volume and thus greater volatility.

I don't believe that is true. Mathematically, holding might affect the overall price and the volatility in absolute terms, but would not affect the volatility in relative terms.

ANTIcentralized

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Quote from: Keyara on October 21, 2014, 09:35:01 AM

Quote from: cafucafucafu on October 21, 2014, 08:24:10 AM

How is volatility ever going to be reduced to make bitcoin a viable currency if people keep holding. Holding results in low market volume and thus greater volatility.

It seems like BTC will become Gold 2.0 rather than a currency.

Volatility will never go away for currency such as bitcoin.

Reaching consensus on price across all countries and various market participants just isn't possible.

The market works for bitcoin in the same way that any other market operates. The reason why the bitcoin market/price is not stable is because the market is not very liquid and the fact that ownership of most bitcoin is somewhat centralized, which means that when someone wants to start a new long position of sell some of their existing bitcoin they will experience a lot of slippate.

pattu1

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Velocity of money is what matters.
It doesn't matter how many people hold bitcoins. If the remaining coins are circulated at a fast enough rate, the price will be stable.

hanisnl

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www.thecryptobot.com

i know a lot of people that have btc from last year when it was going up from $600 to $1000 ... and they will hold it until they have a profit because they don't depend on that money and holding is called an investment .

but as you can see, someone is dumping large amounts from time to time ... my guess is : it's the big players that wanna go into btc ... i may be wrong ...

Unbelive

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Quote from: cafucafucafu on October 21, 2014, 02:11:17 PM

Quote from: Unbelive on October 21, 2014, 08:37:37 AM

Quote from: cafucafucafu on October 21, 2014, 08:24:10 AM

How is volatility ever going to be reduced to make bitcoin a viable currency if people keep holding. Holding results in low market volume and thus greater volatility.

It seems like BTC will become Gold 2.0 rather than a currency.

It gets reduced with every new user. More users there will be less will one of them have impact on price.

Like this:

1. there is only one Bitcoin user and he decide to sell some of his coins. No one would want to buy them and price would fall for few 100 times.

2. There are 10 millions bitcoin users and one decide to sell some of his. 9,999.999 users might want to buy those bitcoins and price might reduce for 0.000001 times

This is completely wrong. If people are holding then there will be fewer sells and thus the volatility.

Where was mention that people holding. I did not mention it with any word. Can you please lead me to where you see word "Bitcoin Holders" please.

hasherr

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Because of BTC finite amount hoarding will always be attractive option. People see easy profits and they hoard. In my opinion BTC is gold replacement, but its gold which its easy to spend, protect and transfer. There are tons of people who dont get invested in gold because its not easy to sleep at night knowing you have 5 bricks of gold in your basement.
Even If bitcoin gets mainstream adaption just as gold 2.0 (and not dollar 2.0) its good enough for it to thrive as technology.

cafucafucafu

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Quote from: Unbelive on October 21, 2014, 08:37:37 AM

Quote from: cafucafucafu on October 21, 2014, 08:24:10 AM

How is volatility ever going to be reduced to make bitcoin a viable currency if people keep holding. Holding results in low market volume and thus greater volatility.

It seems like BTC will become Gold 2.0 rather than a currency.

It gets reduced with every new user. More users there will be less will one of them have impact on price.

Like this:

1. there is only one Bitcoin user and he decide to sell soem of his coins. No one would want to buy them and price would fall for few 100 times.

2. There are 10 millions bitcoin users and one decide to sell some of his. 9,999.999 users might want to buy those bitcoins and price might reduce for 0.000001 times

This is completely wrong. If people are holding then there will be fewer sells and thus the volatility.

Keyara

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Quote from: cafucafucafu on October 21, 2014, 08:24:10 AM

How is volatility ever going to be reduced to make bitcoin a viable currency if people keep holding. Holding results in low market volume and thus greater volatility.

It seems like BTC will become Gold 2.0 rather than a currency.

Volatility will never go away for currency such as bitcoin.

Reaching consensus on price across all countries and various market participants just isn't possible.

ne0futur

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Sometimes holding is best option. we all know even dog can hold things, but when BTC palforms are so risky in these days - holding do not look so bad.

Unbelive

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Invest & Earn: https://cloudthink.io

Quote from: cafucafucafu on October 21, 2014, 08:24:10 AM

How is volatility ever going to be reduced to make bitcoin a viable currency if people keep holding. Holding results in low market volume and thus greater volatility.

It seems like BTC will become Gold 2.0 rather than a currency.

It gets reduced with every new user. More users there will be less will one of them have impact on price.

Like this:

1. there is only one Bitcoin user and he decide to sell soem of his coins. No one would want to buy them and price would fall for few 100 times.

2. There are 10 millions bitcoin users and one decide to sell some of his. 9,999.999 users might want to buy those bitcoins and price might reduce for 0.000001 times

Topic: The problem of holding and volatility. (Read 1955 times)