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Just another clickbait headline article which barely mentions Keynes for the "effect" while explaining one of the terms in a futures market - backwardation. Th
by thisisit 9y ago
Just another clickbait headline article which barely mentions Keynes for the "effect" while explaining one of the terms in a futures market - backwardation.
The explanation is also incomplete. No mention of "cost of carry" or contango. While forgetting backwardation doesn't imply only interest rate but risk premiums too.
To top it, the implication of the so-called interest is from an exchange called Deribit. The 24-hr volume on the market is ~3.8 million or 1% of last 24 hr BTC volume (from coinmarketcap). Not to mention the contract size is $10 which 0.0014 BTC at current prices. The market is super illiquid to be use for any kind of useful analysis.
- empath75 9y agoSo what do you think the cost of borrowing bitcoin should be?
- eigenvalue 9y agoThe whole thing is absurd because we don't have to guess or speculate-- just look at what the actual historical rates have been for BTC margin loans on exchanges such as Poloniex. Nowadays the rate is pretty low, 3.5% to 5%, but it can spike to much higher levels based on supply and demand (for example, leading into the bitcoin gold fork, rates spiked because the exchange wouldn't credit BTC balances with the fork if the coins were being lent at the time).