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Re: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading
by
greyphilosophy
on 15/10/2014, 19:39:31 UTC
Quote from: nrd525 on October 15, 2014, 07:14:45 PM
https://www.bitfinex.com/pages/announcements

In an effort to address some of the community’s concerns surrounding the price premium of TH1 over intrinsic value and lack of liquidity on the book, Bitfinex will be making some adjustments to TH1. Firstly, we would like to plainly state that Bitfinex will not tolerate any behavior that we deem to be manipulative. We are looking closely at the behavior of some of the participants and are mulling over some overall rule changes to discourage certain behaviors system-wide – more to come on that later. Just because the platform permits an unintended use pattern does not mean that we won’t take a punitive approach in dealing with those traders trying to exploit loopholes in a manipulative fashion. This contract is a beta product, and we have reserved the right to make adjustments as necessary to improve the integrity of the product. To that end, the following changes will soon go into effect:

    TH1 no longer good collateral. As of midnight UTC on Monday, October 20th, 2014, TH1 can no longer be used as collateral for opening long swap positions in TH1BTC. Only collateral in the form of BTC, LTC or USD will be permitted. We have made this decision based on the fact that TH1 itself will be worthless at contract expiration.
    Margin requirements will start to increase. As TH1 approached expiration, we will be increasing the Initial Margin Requirement (IMR) and the Maintenance Margin Requirement (MMR) according to the following schedule at midnight UTC on the respective dates:
    Date   IMR   MMR
    Monday, October 20th, 2014    40%    20%
    Monday, October 27th, 2014    50%    25%
    Monday, November 3rd, 2014    60%    30%
    Monday, November 10th, 2014    70%    35%
    Monday, November 17th, 2014    80%    40%
    Monday, November 24th, 2014    90%    45%
    Monday, December 1st, 2014    100%    50%
    Wednesday, December 3rd, 2014    100%    60%
    Friday, December 5th, 2014    100%    70%
    Sunday, December 7th, 2014    100%    80%
    Tuesday, December 9th, 2014    100%    90%
    Thursday, December 11th, 2014    100%    100%

It will be the responsibility of the traders to insure that their positions are backed by enough collateral to avoid any forced liquidation that may result when MMR is increased. We apologize for any inconvenience caused by these changes as we continue to fine-tune this beta product for future offerings.

Hooray!  They've actually done something to help solve the problems with the market long term, and already the order book has shifted to a more reasonable level.  I hope they do take punitive action against those who were trying to manipulate the market, and use it to provide restitution to those who had what would otherwise have been legitimate short positions if not for the manipulation.  But I'm not holding my breath.
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Re: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading
by
greyphilosophy
on 15/10/2014, 17:41:34 UTC
Quote from: pgp on October 15, 2014, 05:16:11 PM
Quote from: greyphilosophy on October 15, 2014, 04:57:59 PM
Quote
the extra 100 TH1 had not been added yet - still waiting for next dividend to get mined.  Bitfinex has always announced supply increases prospectively in this fashion.

That's really not enough time.  Since most swap contracts are 30 days we should have 30 days notice before a change in supply.  Otherwise we don't really know what we're buying or selling.  It's now become a matter of speculating on whether or not bitfinex will intercede on the market, and when.

The supply should have no impact in the price - the price should reflect the net present value of the expected dividends.  Increasing the supply doesn't change that.  The only purpose of the announcement it to put a time certain for when the hashing provider is supposed to accrue an additional dividend for remittance back to Bitfinex.

We would strongly caution anyone from continuing to be long TH1 unless you believe that the dividends that you will receive through Dec 15 is more than the current bid price.  For that to be true, BTW, difficulty would have to *drop* 10% every 2 weeks until Dec 15 - so - stay long at your own risk and remember that this is a BETA PRODUCT and Bitfinex will do what it needs to to keep the market rationally priced.  This product is intended as a way to speculate on future difficulty.  Substantial distortions and manipulations will not be tolerated.

Can you point to a single day since they've started where the market was rationally priced?  The supply impacts the price because there was a shortage of swap contracts being offered.  If your swap times out then you have to either renew (and swap rates increased in anticipation, and there aren't enough of them for everyone) or buy in order to close your position.  As long as the supply of btc is massively higher than the supply of TH1 the market is ripe for manipulation.

When we get to the last 30 days before the contracts expire then every swap contract that lasts until after the expiration date will be taken regardless of their rate because they will never have to be paid back - it's just free money.  So let's say no one offers swap past expiration (why would they?).  That means everyone who has a short position will have to close it before the last day.  That means they need to buy, which means someone will have to want to sell.  That leaves shorters bent over a barrel begging someone with a contract to sell it to them to let them out.  What will bitfinex do then, just give it to them?
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Re: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading
by
greyphilosophy
on 15/10/2014, 16:57:59 UTC
Quote
the extra 100 TH1 had not been added yet - still waiting for next dividend to get mined.  Bitfinex has always announced supply increases prospectively in this fashion.

That's really not enough time.  Since most swap contracts are 30 days we should have 30 days notice before a change in supply.  Otherwise we don't really know what we're buying or selling.  It's now become a matter of speculating on whether or not bitfinex will intercede on the market, and when.
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Re: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading
by
greyphilosophy
on 15/10/2014, 14:56:27 UTC
Quote from: l1za on October 15, 2014, 02:00:59 AM
Quote from: lg1500 on October 14, 2014, 05:37:34 AM
Quote from: nrd525 on October 14, 2014, 02:15:21 AM
There is enough swap, as when the contracts run out - it frees up a lot of swap (unless the lender refuses to renew).  The question is whether they'll try a short squeeze, or a swap squeeze. I'm thinking a swap squeeze is more profitable and we'll see 1% interest rates.

and bitfinex let this happen, and not answer for any mails

Is there any update about this?

They added more contracts and have kicked the can down the road.  I'm a little pissed that they didn't tell us in advance.  I closed a short position because I believed that there wouldn't be enough swap on the market for everyone to renew, and the price wasn't going down because someone put in a price floor.  Also recognizing this problem I jumped to the other side, buying contracts with the expectation that there would be a short squeeze.  To add contracts at the last minute means that I've now been screwed twice.

Adding more contracts doesn't help because there is still a chance that rational players will not offer any swap for the last day before contracts expire.  Add to this the interest those swap contracts are accumulating, which has to come from somewhere, and in the end there won't be enough TH1 in the market for everyone to close their positions.

Because I cannot predict what bitfinex will do or when, and their actions have serious consequences on the market, I'm now looking for the best way to withdraw.  I thought I was buying contracts in a market of 500, and after the fact it was changed to be a contract in a market of 600.
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Re: TH1BTC Speculation Thread - Bitfinex Cloud Mining Contract
by
greyphilosophy
on 14/10/2014, 20:15:06 UTC
And as long as the price floor is intact it doesn't matter who is offering the swap, eventually the manipulator is going to add that contract to their position as well.  They might even intentionally be adding swap just to widen the net.

The idea of adding more swap is interesting, but if bitfinex offers swap on the last day, then everyone would pounce on it because if they can sell it then it becomes pure profit.  For this same reason anyone who offers swap past the last day of the contracts is an idiot.  They'll get the mining dividend, but they'll never see any real return from the contract.

I think the only way to make money off this would be to buy contracts, hold them for the mining dividend, and then sell them before it all hits the fan and the price floor drops.
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Re: TH1BTC Speculation Thread - Bitfinex Cloud Mining Contract
by
greyphilosophy
on 14/10/2014, 05:41:56 UTC
All that swap is earning interest.  What happens if the amount owed exceeds the 500 contracts?  So long as no one offers swap past 14.12.2014 then no matter what the price goes to infinity...
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Re: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading
by
greyphilosophy
on 14/10/2014, 01:47:28 UTC
Quote from: nrd525 on October 14, 2014, 12:44:48 AM
Should I manipulate the price of the TH1 contract and increase its price to 2 BTC and the suck dry the people stupid enough to short it (by offering them swap at one interest rate for the next 30 days, and then doubling or tripling it for the last 30 days)?  Or is Bitfinex going to take action and reverse trades on this badly constructed contract.

I don't think they are going to take action.  There isn't enough swap or asks to support all the contracts running out on Wednesday.  The smart thing to do is to use this knowledge to your advantage.  Even if you don't, it seems someone has planned this for a couple weeks now and the short squeeze will happen anyway.
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Re: TH1BTC Speculation Thread - Bitfinex Cloud Mining Contract
by
greyphilosophy
on 13/10/2014, 18:12:15 UTC
As far as I can tell, none.  I was worried that I'd have to pay the interest on the term, but that didn't happen.  Just make sure you have enough unused swap to cover the swaps you are closing.
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Re: TH1BTC Speculation Thread - Bitfinex Cloud Mining Contract
by
greyphilosophy
on 13/10/2014, 15:54:34 UTC
Quote from: nrd525 on October 13, 2014, 05:05:23 AM
Someone is selling. TH1 swap down to 292.5.  Price is down, but there is also nothing on the order book from 1.283 to 1.399.  Does the swap interest get calculated based on an average of the bid and ask, or something else?

I think people are receiving swap but not using it right away.  If there is a short squeeze on Wednesday then that will likely be the best time to place another short.  Otherwise it is people closing their short positions and the person holding the contract not willing to offer swap so they themselves can sell during the squeeze.
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Re: TH1BTC Speculation Thread - Bitfinex Cloud Mining Contract
by
greyphilosophy
on 12/10/2014, 22:59:45 UTC
Quote from: odolvlobo on October 12, 2014, 07:59:21 PM
It's not that easy. The income generated by the contracts has to come from somewhere.

Those who receive swaps (e.g. shorters) pay the dividend on the contract.  This allows those holding contracts to offer swap without losing dividend.
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Re: TH1BTC Speculation Thread - Bitfinex Cloud Mining Contract
by
greyphilosophy
on 12/10/2014, 05:08:48 UTC
I feel your pain. I closed my position today at a total loss of .77 btc, and I count myself lucky it wasn't worse.  I think if bitfinex does this again they should offer unlimited swap contracts at a rate of 1.11% (rate of depreciation).  If they suddenly add more liquidity now though then I'll be pissed.
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Re: TH1BTC Speculation Thread - Bitfinex Cloud Mining Contract
by
greyphilosophy
on 12/10/2014, 02:20:18 UTC
It seems pretty obvious that the market is being manipulated.  The price on an overvalued depreciating asset should not be going up. 

In a few days the people who shorted on day 1 will be looking for more swap, and it either won't be there or it will be there at a high cost.  So that means a lot of people are going to be forced to buy, and that's going to push the price up and maybe make some people liquidate their short positions (pushing the price up even higher).  Those who bought, even at an over-valued price, will turn around and sell at a higher profit.

You should consider closing your short positions before that happens.