Re: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading
And this with the price of bitcoin finally showing some signs of rising... can't tell if that's a collective statement of "Bullshit, it's going to be back to bear-town any day now", or a sign that even with an uptick the supply of funding is outpacing the need for funding, or just a result of people saying "Trading? Not right now, it's christmastime".
All of this, combined, is whats killing the rates right now. The market is just too flat to pull in many new investors, people just aren't excited about bitcoin anymore. Even in my Local sales, I'm only getting repeat customers, whom I mostly attribute to black market buyers. I haven't had any real investors show interest in months. And most of the people I talk to who are invested are moving to safer investments than buying coins on margin. A lot of that money is getting pumped into margin lending, which increases the supply even more, and lowers the rate even more.
Just because FRR aren't being taken doesn't mean they aren't contributing to supply. As I stated earlier, the Fixed rates are pegging themselves to FRR (minus a tiny amount to put them TOB), but FRR is pegged to market rate (determined by fixed rates). Just having all those orders on the books drives down price, just like any other order book. If BTC price was rising, you'd expect lending rates to increase. The simple fact is, FRR are lazy investors and they're driving down rates, just like lazy whales always do. Hell, I wouldn't mind if Bitfinex just scraped FRR. It sucks as a borrower, too, because your rates are always fluctuating. As a lender, it sucks because you'll never get your order taken.
Exactly this. The problem with FRR is that it creates an artificial downward wall, not a fair value market. In times of low demand people set low prices, and the market goes down like it should. But in times of mid to high demand, the low priced orders get taken, then we work into the FRR. The money is still getting taken at FRR rates, so the average doesn't go up and because a few orders still slip in below FRR, the average actually is still going down, despite high demand. Only in times of HUGE demand do rates ever go up, and then they quickly sink back down once the HUGE demand period is over and FRR loans start returning. If you look at the historical rate charts this is painfully obvious.
In a normal, unmanipulated market prices should naturally go up and down, not always down or into a wall. I am actually fully convinced at this point the only way bitfinex margin lending is going to survive is to completely get rid of the FRR. If you look at the chart, we're actually hitting new lows after every wall break, and the wall breaks are happening less and less frequently. Soon rates will be lower than a good bank savings account, and when that happens, well, nothing good will come as a result.