Quote from: Barabbas0 on January 01, 2015, 03:22:51 PM

Quote from: atlosas on January 01, 2015, 02:10:06 PM

Well low rates are good for traders. There is too much of supply atm so the rates are very low. But i guess when demand increases and rates shoot up there might be some shortage but it won't last long, market should stabilize it.

It's terrible for traders. Right when you hit buy to jump in on the next rally, there will be no liquidity to lend from. You end up having to pay XXX% (annualized) for a leveraged position which eats into your P/L. It amplifies the time value of your position, immensely. For example, if the market trends sideways for a little bit, you'll be paying out the ear for the time of holding an outrageously expensive loan.

It's a ticking time bomb, BFX really doesn't understand liquidity and the importance of stability in fixed income markets. Things like interest rate risk really shouldn't factor into traders' decisions.

1) Put a USD Swaps demand offer for 30 days at the rate you want.
2) Buy all the Bitcoins
3) Enjoy the knowledge that you won't be paying more than 0.278% (like 10%/year) the next 30 days
4) Huh

5) Take loss (or profit if this thing actually moves up)

See, the secret that is used so successfully by the trader elite is to reserve the USD at low rates for long periods before buying all the bitcoins. You may actually end up paying interest for USD you don't use for some hours or a day but that's life.

As for those who say "these rates are too low": People are, for some reason, willing to lend out at these rates. If you are a lender and you find these rates to low then go find something else to do with your digital american toilet-paper.

And there is generally no reason to worry about "Bitfinex running out of USD". If there is little USD available then rates go up and millions of fresh USD magically appears. It's supply and demand, it's that simple.