Topic: This Bitfinex Credit Bubble cannot end well - page 37. (Read 62099 times)

Where did you get that?
I am looking at USD swaps for the past 6 months, it went from 10m to 25 m, this is point to point a factor of 2.5 (with the 20m peak in between - a factor of 2) . This is close enough to your factor of 2 for shorts, but you are just wrong about this one as well. For fair comparison you have to look at peak values . The fact that there are a lot less shorts than longs today (June 28th) in comparison to a time point about one month ago, is simply a reflection of sentiment (bullish market). We are in the uptrend right now. The stronger the uptrend the higher the ratio of long/short is.

"Antagonistic one liner" much?

Seriously though, Blitz didn't get "owned". His choice of a title was maybe too sensationalist, but read his OP again: Blitz' concern wasn't that the loans somehow aren't backed (which is what urwhatuknow/Giancarlo from finex responded to - pure straw-man rhetorics) and finex would default, his point was (quote):



Also, the "Bitfinex market share increased" argument doesn't counter his main point: longs increased by factor 9, shorts increased by factor 2.

tl;dr Blitz didn't call out the exchange finex, so Giancarlo's childish response was completely uncalled for. He called out the "overleveraged maniacs" trading on finex though.

Just see any charts site (bitcoinwisdom.com for instance), the bars at the bottom is volume per selected period of time. I know this is stating the obvious, but why asking the question which has the obvious answer? The volume data is right there.
Regarding the volume trends on "short swaps", they HAVE grown as well. I compared as you suggested and I do see a correlation.
Please see the 3rd party's stats site at bfxdata.com. At the top left corner select "swaps stats" for BTC and for USD, open in different browser tabs and toggle between the two. You will see that amounts of borrowed BTC since the beginning of this year peaked from about 3K BTC to about 12K BTC. In fact, the increase in borrowed BTC is bigger than for USD swaps. Usd swaps grew from about 10m to 20m (first peak) and now to 25m. Importantly, when looking at these data and comparing, you have to account for for the sentiment index and the actual BTC price data. For instance, during the last month, traders became increasingly more bullish on average, this is naturally why amount of borrowed USD swaps went up, while BTC swaps went down.


Don't just "glance", try to analyze and see what happens over time. The order book is not carved in stone, it is changing all the time and it is absolutely always a lot "thicker" in bids, which are closer to the current price, on both ends.

Just try to experiment for yourself: Take a "snap shot" of current order book and mark the price. See what is the volume (in order book terms) which it would take for the price to change from the current value to some other value (just mark several scenarios for the price movements in any direction). Wait for the actual price change to any of your marked values and see the real trading volume between the two points. Then, compare the real volume to your original "snap shot". You WILL see that the real volume and the volume you had per order book will be always different AND it could be higher or lower.
 
Another thing is that Bitfinex has "hidden orders" and those are typically quite big (there is probably no point of "hiding" anything under some 5 - 10 BTC). I know there are a lot of hidden orders out there, all the time, this is just personal experience. These make the order book a lot "thicker" than it looks.

Some numbers:
First of all, the current 2.5:1 leverage restriction, plus the 13% of trader's funds reserved in margin requirement, are more than sufficient protection against the worst flash crashes ever known to BTC market. With all of the current expansion of Bitcoin adoption, the growing interest from VCs et.c., I don't think we should expect Bitcoin price to have a complete "free fall", right?. But even then, just like for any publicly traded stock for instance, there is a trading halting, which I believe is also in place at Bitfinex.

I don't have much to say about "order book manipulation", but I've read satisfactory to me comments from Bitfinex team on this elsewhere. I believe there were some recent fixes made in this respect, but generally speaking, this is about finding the optimum between having useful features and their abuse of sorts.

About Bitstamp orders routing, I personally would indeed prefer this feature to be there (at least for bigger orders), but again this is all about big "internal" volume. Trading volume at Bitfinex is sufficiently big for them to become completely independent. After all, to say that Bitfinex is "bad" because it no longer offers Bitstamp routing feature is just wrong. We do not go to BTC-e (or to Bitstamp for that matter) and complain to them that they don't offer any routing, right? BTW, why don't we?

i hear that! and on the matter of sufficient liquidity, +1000. now, i know that bids will come in as price drops, but just take a moment to compare bids to $100 --
with active swaps --

that is some scary, scary stuff. leveraged long? don't look down -- keep thinking happy thoughts. bubble coming, etc.

Yes, leveraged traders will get wiped out. First. You assume sufficient liquidity to save lenders. That's a joke. Bitfinex has not insured all swap! They have "effectively" insured it. Do that math -- 15% of swap fees? Versus the reality if they have to liquidate the book? Everyone is just so damn sure that a crash can't keep the price down. But if it does, Bitfinex can't lock traders in their positions, and lenders past their contracts, indefinitely. And that will be the end of this house of cards.

(I'm amazed at how this community learns nothing from the past)

There are no accusations in the OP - it is entirely valid speculation about leverage and swap costs.

Please warn before you do this. I still have coffee coming out of my nose.

Yeah ... about that ... I think you need to expand your imagination a little. Talk to Zhou Tong about it.

What do you mean?

you can always ask R to edit the data base and give you some money to play the market, but i guess first u need to be a special friend 

Leveraged traders will get wiped out first before lenders. And since bitfinex has insured all swap, they will get sued if they do not keep their promise.

Do you have numbers to back up the first bolded? Compare to short swaps over the same period.

And on the second, take a look at the order book. And consider order book manipulation on top of that. Consider that Stamp liquidity is gone. In a serious decline -- a flash crash that does not recover -- how much of those longs can be sustained by the book?

I'd like to see some numbers since you seem so sure. At a glance, the situation is actually quite bad.

This has been my worry for a long time. Lenders will be fucked if the price on other exchanges doesn't recover and the book is liquidated. They should have cut back on trader's margin allowed a long time ago. It's out of hand.

Blitz just got totally owned.

I can't believe this thread even exists, Giancarlo shouldn't have even bothered commenting the obvious!
The logic in the original post is SO totally wrong and the OP really needs to do the homework on basic trading tools (for ANY commodity trading platform!!!) before trying to "make waves" with absolutely no basis to the accusations.

Fist of all, the total borrowed (regardless of what it was in the past) is a reflection of current traded volume on Bitfinex and this number grew simply because more traders joined the platform recently. This is just what it is - Bitfinex recently became the most popular exchange for BTC/USD pair.

Secondly, ALL of the borrowed by traders funds you see are fully backed primarily by THEIR OWN funds. There is simply no other technical way to borrow, but to have sufficient amount in trader's own account and the leverage at Bitfinex is a measly 2.5:1 (this is "nothing" in comparison to a 400:1 or more offered by some Forex brokerages).

What "credit bubble"? What are you talking about? Why do you care and what is your grudge?

Impression of first response by Giancarlo in here: absolutely terrible.

Impression of second response by him: quite good.


There's still hope :D

It's not an ad hominem attack, it's just a simple observation.
I see from your profile that you are the moderator of this section and this means you have to be moderate.
If you were a provocateur ( there are so many on bitcointalk) I wouldn't even have blinked.

Bitfinex is currently the no.1 platform for volume on the BTC/USD pair, taken away Chinese platforms that run on a 0% commission basis and therefore can't be trusted for their volume.

I believe our platform is  financially, technologically and managerially superior and deserve to be there.
We came to this position with almost zero media exposure, we decline every interview request, conference intervention or any other type of advertisement.
It's pure word of mouth and customer service.

To take a simple parameter ( swap amount to BTC price ratio)  and to extrapolate a theory to explain we are at risk was in my opinion not very "moderate" by you.

Bitfinex has been growing tremendously in the last months and the amount of swaps is only one of the various parameters that should be taken into consideration.
As usual, time will tell who is right and who is wrong.

I believe BTC is getting into a more mature phase and if our customers believe that BTC is on the verge of another big leap ahead there is not much we can do about it.

By the way, if you were more familiar with our platform ( by your own admission you are not) you would know that we recently decreased max leverage from 5 to 2.5 and we believe this is reducing risk in a considerable way.

I might not be the best PR guy in town ( this is a fact ), but I will be more than glad to reply to any specific question you might come up with.

Thanks a lot and have a great weekend.

Giancarlo
Bitfinex Team      

A Million times, THIS.

Are you being coached in business ethic by Inaba or something?

Yeah. It would nice to have some stat (which we could believe in) which stated unequivocally how much of those swaps are currently employed in leveraged long positions. If it is anything near to ALL OF THEM then that would indeed be a ticking timebomb, so much so that I don't believe that this can be the case. One simply doesn't sit in a leveraged long position, paying those sort of interest rates whilst the market retraces and/or consolidates, which is what it has been doing for around a month now.

If it is indeed the case that we have a whole lot of leveraged longs sitting around waiting on their break-even point to come back and perhaps a little bit of profit, then that is a shit ton of selling pressure just waiting to be released.

If it is the case that none of the information coming out of Bitfinex can be fully trusted and behind those swap rate stats, lie layer upon layer of Bitfinex duplicitiy, then that wouldn't surprise me at all and would perhaps paint less of a foreboding picture for the Bitcoin market......unless of course one trades or has money on Bitfinex.

Now that MPOE-PR has been banned this could even be true.