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This is why getting listed on the CME is a bad thing


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So everyone was getting excited that Bitcoin and hopefully XRP would be listed on the CME.  I've always said that this is a bad idea because if you think price manipulation is bad now, just wait until Wall Street get's their hands on it.  Everything on the CME gets manipulated easily because all Wall St. has to do is dump a ton of paper BTC and XRP to drive the price down.  They have no skin in the game, but they can still manipulate the price.....

They have been doing this to gold and silver for years...

http://www.zerohedge.com/news/2017-11-10/someone-just-puked-over-4-billion-notional-gold-futures

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Here is the thing about that though.  In the bullion market the Futures Market sets the price.  BTC futures are going to be cash settlement only and they are going to get their price by aggregating the exchanges.  So anything that happens on the Futures market won't touch the exchanges.  They won't be able to short BTC like they can gold because they can't get their hands on the BTC.  The only way to actually drive down the price would be to sell actual bitcoins.

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On 21/11/2017 at 2:12 PM, Eric123 said:

Here is the thing about that though.  In the bullion market the Futures Market sets the price.  BTC futures are going to be cash settlement only and they are going to get their price by aggregating the exchanges.  So anything that happens on the Futures market won't touch the exchanges.  They won't be able to short BTC like they can gold because they can't get their hands on the BTC.  The only way to actually drive down the price would be to sell actual bitcoins.

Your assuming this bullrun for the last couple months hasnt been insiders buying up knowing whats coming and then double dipping to short the market when its activated making money on the run up but making a gell of a lot more on margin on the way down

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@Naki  Insiders???  Who are the insiders??  In a business they are the officers of the company.  Who are the insiders of a decentralized blockchain   Also Explain to me how you short cash settled futures when you aren't actually buying or selling bitcoin.  Explain to me how these stupid futures will move price at all.  They are getting their price from an aggregate of the exchanges, then betting on price.  They are not buying or selling any actual coins.

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52 minutes ago, Eric123 said:

@Naki  Insiders???  Who are the insiders??  In a business they are the officers of the company.  Who are the insiders of a decentralized blockchain   Also Explain to me how you short cash settled futures when you aren't actually buying or selling bitcoin.  Explain to me how these stupid futures will move price at all.  They are getting their price from an aggregate of the exchanges, then betting on price.  They are not buying or selling any actual coins.

Your assuming they havent already bought the bitcoin and by insiders i refer to the bankers and cme group who had inside knowledge futures would be announced for bitcoin later this year.

Say a few investors 6 months ago had inside knowledge futures would be announced later this year for bitcoin. They know that 6 months before market wouldnt it make sense to start buying up bitcoin with that knowledge then.

So at this point if they have been buying on that news for months and months already with large sums they have already accumulated massive amounts.

Now futures are released and they place a large margin bet on bitcoin going down and short it. They then flood the exchanges with there coins selling out what they bought and make money on bitcoin while also collecting on the a larfe short bet that was a sure thing to

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With the mass tether printing and all the other dodgy deals going on right now to artificially inflate price the last 6 months pumping bitcoin to record highs on zero new potential its a huge possibility and even roger ver with ghs 25k bitcoin could flash crash the market quite significantly while betting on a margined short to make considerable money

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@Naki what you wrote makes absolutely no sense. First of all bitcoin isnt going up because they are gonna trade futures. Futures wont move the price at all.  Also you cant short it with futures. The futures market doesnt set the price. The only way to short it is to borrow the bitcoins that someone has to actually own then sell them on an exchange. Basically your saying "insiders" bought it to drive the price down.

 

Edited by Eric123
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https://seekingalpha.com/article/4128569-5-things-aware-cme-bitcoin-futures

extract;

 

“5 Things You Should Be Aware Of CME Bitcoin Futures”

Nov. 29, 2017 3:20 PM ET

 

 Includes: CBOE, CME, COIN, GBTC

Melwin Philip 

Certified Research Analyst, Growth, long-term horizon, Cryptocurrency Enthusiast

(330 followers)

Summary

“CME is launching Bitcoin futures in December 2017.

As defined by the CME CF Bitcoin Reference Rate (BRR), Bitcoin future will have 5 BTC as contract unit.

Unlike Bitcoin exchanges, Bitcoin future will have a defined trading window and circuit filters.

CME Bitcoin future brings the option to short Bitcoin.

1. How CME Bitcoin Future is going to function?

If a trader buys a bitcoin futures contract and hold it when it expires, nobody hands over the 5 bitcoins underlying the contract at the time of expiry. Instead of that, CME (NASDAQ:CME) computes a daily Bitcoin Reference Rate (BRR) which aggregates the trade flow of major bitcoin spot exchanges during a calculation window into the U.S. Dollar price of one bitcoin as of 4:00 p.m. London time, and if the Bitcoin Reference Rate at the expiry of underlying futures contract is higher than the BRR when he opened the contract, the investor get paid the difference (times 5), and vice versa.

The BRR is designed around the IOSCO Principles for Financial Benchmarks and Bitstamp, GDAX, itBit and Kraken are the constituent exchanges that currently contribute the pricing data for calculating the BRR.

This means that traders are "cash settled" and they get exposure to bitcoin without ever actually handling bitcoins.

2. Who is going to short Bitcoin futures?

Till now heavy weight institutional investors have no choice to short Bitcoin as they do it for other commodities and stock futures. I am not expecting any major participation from retail investors, but most of the short trades will be initiated by below two categories

Miners

Institutional Investors

Why miners: Every month, miners have to maintain their cash flows to pay their expenses including electricity and hardware costs. Unrealized profits always belong to market. If they believe that Bitcoin price is about to go down they could hedge their price by shorting a minimal percentage of holdings which can be covered later. Since miners have direct access to all "insider information", I believe they could use Bitcoin futures aggressively going forward.”

end of extract

Edited by Khaleesi
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20 minutes ago, Eric123 said:

@Naki what you wrote makes absolutely no sense. First of all bitcoin isnt going up because they are gonna trade futures. Futures wont move the price at all.  Also you cant short it with futures. The futures market doesnt set the price. The only way to short it is to borrow the bitcoins that someone has to actually own then sell them on an exchange. Basically your saying "insiders" bought it to drive the price down.

 

Im saying with futures you can run leveredge margin trade quite significantly on a market bigger than bitcoins total.

So assume the insiders knew 6 months ago cme would offer futures for bitcoin this year now lets say they bought bitcoin over the last 6 months with that knowledge allowing bitcoins price to grow significantly although it is more likely they atruck a deal with bitfinixed and just pumuped it with tethers.

Now they own bitcoin amd very large sums of it already enough to crash the market.

When futures open they go short on futures for a lot of money at a very high margin. They then sell all of there bitcoin which causes the market crash which guarantees them both profit from the bitcoin at overpriced levels and a huge profit from a inside trade on the futures because they just crashed the market zero risk and in a unregulated market also not illegal

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1 minute ago, Eric123 said:

@Naki but it's such a small market that it would be easy for one billionaire to take the other side of the trade and ruin their plans and get their bitcoin.

depends how quickly they can drop the price and panic new investors if it flash crashes on say a volume of 50k bitcoin across exchanges.  Currently 3400 btc on polo could drop polo to 6k for bitcoin and the ensueing stop losses would then kick in dropping it further then they could easily see a flash crash to 4k roger ver alone holds 25k bitcoin on exchanges and if these guys have been buying the last 6 months they potentially own a lot more at that point they cancel there short cash out and people are expecting a crash so wouldnt be looking into it the next billionaire can then buy in but there moneys already made the bitcoin isnt there big payday the short is

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16 minutes ago, Eric123 said:

@Naki but it's such a small market that it would be easy for one billionaire to take the other side of the trade and ruin their plans and get their bitcoin.

If you take into account 700 million tethers have been created in the past 6 months since bitcoin was 1.5k take a midpoint value of say 6k there is potential they have accumulated over 100k bitcoin in this time

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35 minutes ago, Eric123 said:

@Naki but it's such a small market that it would be easy for one billionaire to take the other side of the trade and ruin their plans and get their bitcoin.

Then you also got to consider Bitfinix flash crash a few days ago for omg and NEO. from $35 to $2.50 in minutes and then back up think of it as a test run.

flood the market down 95% have buy orders just under the flood price so all stop losses sell into you shorts complete on futures you jsut accumulated 10 times more and pocketed cash plus your futures just paid out huge its a multi billion dollar short and the markets unregulated so technically noone has a leg to stand on and if bitcoin bounces back you made even more profit but if it doesnt you just made more money on futures than the markets worth 

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