Topic: What about liquidity? (Read 1997 times)

They don't, but maybe they should. But it is not for people looking to sell off their responsibility, they need solid critical thinking. The fog of desinformation is thick here.

Don't you know that pensioners are looking for investment advice on these esteemed fora?! For shame. lol

No, it was you who suggested that. This is for people who are comfortable with their net worth, but feel the need, unnecessarily, to hold a large day to day fiat cash balance. Troll.

you literally advised people to put all their worldly money into highly volatile and unpredictable bitcoin and open margin positions on top of that to boot ... sigh ... nevermind ...

Sounds risky...but you could always sell a few forwards to mitigate. Troll.

I decided I was willing to risk a few coins on the above mentioned site.

i hear it's also a good idea to take out multiple mortgages on your house and max out your credit cards ... ffs ... just wow ...

You raise a good point, using options and leverage can basically put you in whatever type of exposure you want, even neutral.

To date, the problem has been trusting an offshore, dubiously registered and secured entity with custody of your assets. Maybe some of these new entries will fill that void.

Here is a suggestion for those who are safe in the solvency department, and believe that the probability for bitcoin going up is greater the probability for bitcoin to go down, but are afraid to draw down their everyday working fiat account. There could be a rainy day soon, right?

The answer is that you can safely draw down your fiat account to almost nothing, because bitcoins are extremely liquid, and if you get a surprise expenditure, or the balance is a little too tight before salary day, you can sell just enough coins to get by. High liquidity means (for me) that I can sell bitcoins on localbitcoins for a national bank transfer or better, to someone having an account in the same bank as me, and the trade can be completed and cleared in minutes.

A problem you might point out, is that the price of bitcoins at the exact moment you need the fiat, might be too low to your liking, and you prefer to avoid selling while the price is low. But you don't necessarily have to sell bitcoins in advance for that: enter the magic of finance. For each coin that you have to sell for what you think is a too low price, enter a long forward contract for one bitcoin. To do that, you have to post half a bitcoin as collateral on cryptofacilities.com or something like it.

The effect is that you sell the bitcoin, but buy back the risk (both up and down), so risk wise, you are just as good as if you did not sell at all.

Clever, eh?

Edit: There are fees, spread and third party risk to think of also.