Quote from: HowardF on December 24, 2014, 03:57:46 PM

Quote from: noggin-scratcher on December 24, 2014, 01:12:15 AM

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.

Quote from: Barabbas0 on December 24, 2014, 01:13:44 PM

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.

I disagree, when rates get too low...it seems you think people will choose to stop offering, which lowers the supply, which leads to...higher rates. So, the rates will be always just higher than the bare minimum necessary to incentivize people offering a swap (I think that if you can find a bank account that offers 0.03 or around there compounded daily please let me know where), similar to mining. If 20 million of the 25 million currently actively being used were to say "I can do better elsewhere", and given that the demand still exists for 25 million in swaps, the rates would have to rise dramatically...

I do agree that the FRR acts as a damper...but who is to say it wouldn't work the same way in reverse? It is not inherently downward pressure, it is simply a damper on movements in general. If we were in a huge bull market, a real one, like the rise to 1200, wouldn't the FRR stop the rates from falling as more and more fixed rates were taken above the FRR? Or alternatively, if people acted rationally and if they didn't know which way it was going to move, they would simply choose the cheaper option, shorting. Wouldn't the FRR act in the opposite manner on the BTC market? I haven't really looked at how it might play out, but I think in general that any large sluggish pool of money isn't inherently downward or upward motivated, and a lot of the factors would really influence decisions of everyone.

I think that because we have been in a bear market for a LONG time, the speculative interest (as you astutely pointed out) has somewhat dwindled. More people perhaps are realizing that while bitcoin may go to the moon, I am not so sure that that trip will happen within the next 30 days. I, personally, find that on the streets, locally, demand is incredibly high, and usually if you want to buy, you are paying a pretty big premium. I for one have a standing buy order for 2% above bitfinex from someone I know. He sells the coins to others for 8-10% above, but his main issue is getting enough coins to satisfy the demand. So, I think that a lot of what you pointed out is correct.

Either way, if you removed the FRR, you would still have the exact same rate, because the people choosing the FRR aren't getting filled. Everyone is competing with the people around them, and I think many people are simply looking for a more stable return after maybe getting burned in the bear market. After losing 20%, you tend to be a little more cautious, and 10% starts looking pretty good.

I do think there is a shift occuring, maybe the last gasps of the crazy speculation that was the hallmark of 2013...but I am very hopeful, because I see more real services that are using bitcoin, many of which rely on a deep, liquid market where they can actually obtain bitcoin, or dollars, rather than simply gambling on some 20X contract with no actual delivery, pegged to an index.

Some of the services that I really love, and feel free to suggest others that you like are:

1. Coinapult (not available in the US, unfortunately), but I used to work for them, and helped build their locks product
2. Piiko - One of the most realistic and potentially amazing uses for bitcoin, 66% of cell phones are prepaid...allowing you to recharge their balance, easily and without worrying about local currencies is a HUGE feature.
3. Leetcoin - I wish this were bigger, but I think that eSports is going to be HUGE in the years to come and competitive cash games seem like a really cool idea. I absolutely LOVE League of Legends, and I think that community has so much synergy with bitcoin, only a matter of time before Riot starts accepting them.
4. Purse.io - Helping people buy things with a discount, while allowing them to basically place limit orders...
5. Changetip - Content monetization and tipping are going to be a killer app
6. Localbitcoins - I paid for my rent in Colombia using a localbitcoins buyer, was far faster and cheaper than a wire...

Not sure if I am missing any obvious ones, but if we are seeing a shift from speculation to usage, that is a good thing in my eyes. Not that there is anything wrong with speculating, it is a valuable activity and provides liquidity, but the usage of bitcoin (and note that almost none of those services really care what the price is) is the reason that the speculation exists.

I think that eventually, if bitcoin does what it is capable of, it will be more like the forex markets than the pink sheets, and you will be looking at pips, not tens of dollars in movements. At the end of the day, I really believe that bitcoin is a better system, and I hope to see adoption increase. To be honest, I rarely look at the price, because I think that once usage increases, the price will follow, but then again, I am a very typical buy and hold type of guy.