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Nasdaq Plans to Introduce Bitcoin Futures
- chinathrow 9y agoI don't know why you should be able to speculate on a speculation product with no real underlying other than a power conversion function.
- revmoo 9y agoThis but with Gold ETFs
- api 9y agoAn adult is allowed to go to a casino and buy lotto tickets too.
- deleted 9y ago[deleted]
- jonknee 9y agoConsidering you can speculate on market volatility, Bitcoin doesn't seem way out of bounds.
- deleted 9y ago[deleted]
- gabesullice 9y agoSerious question: how do you feel about currency futures? If you feel differently about them than you do Bitcoin futures? Why?
- bluGill 9y agocurrency is a real thing that is mostly used for real transaction. Most people working in currency futures are working to offset risk - that is I shipped a widget when it is delivered the buyer will pay a set price in their currency which I have to convert back to mine. Bitcoin is used for transactions, but most of the futures are based on speculation on future value and not something fundamental.
- ryanobjc 9y agoMaximum snark: and that's why you aren't on the NASDAQ board? Besides which, there's nothing underlying the US dollar either. Sure you can pay taxes, but that's about it. The rest of the economy is a shared belief, an illusion if you will. Shocking alert: your existence is due to the permission of others.
- ThrustVectoring 9y agoThere's a real case for the market. Bitcoin miners can short the futures contract and turn "use dollars to buy electricity and mining gear for bitcoins later with ??? prices" into "dollars now for bitcoins later at who-cares prices that nets out the short bitcoin position that gave us dollars now".
- deleted 9y ago[deleted]
- colemannugent 9y ago>... New York Stock Exchange owner Intercontinental Exchange Inc. is the only one of the four major U.S. exchange operators without public plans to offer bitcoin derivatives. That's pretty big. A couple years ago people were very skeptical that the big players would ever start dabbling in Bitcoin.
- wpietri 9y agoIn some sense, they're still not. Derivatives don't require much involvement in the underlying commodity. For example, consider weather derivatives: https://en.wikipedia.org/wiki/Weather_derivative https://en.wikipedia.org/wiki/Weather_derivative E.g., the CME's weather futures and options: http://www.cmegroup.com/trading/weather/ http://www.cmegroup.com/trading/weather/ It's not like the Merc is really involved in weather. They just let people gamble on the weather.
- lallysingh 9y agoNYSE also backs coinbase.
- anonymous5133 9y agoThat is huge. Five years ago the financial establishment was basically saying it was an investment fraud scheme.
- chollida1 9y agoMy guess is that this is probably pretty meaningless. There are a few things going against them. - The CBOE and CME are both much larger futures exchanges and are going to be offering futures first - since you can't net out futures contracts from different exchanges this means they tend to become winner take all > One way Nasdaq seeks to differentiate itself seems to be in the amount of data it uses for pricing the digital currency contracts. VanEck Associates Corp., which recently withdrew plans for a bitcoin exchange-traded fund, will supply the data used to price the contracts, pulling figures from more than 50 sources, according to the person. This might be interesting as one of the things that everyone is worried about is price manipulation. If you haven't thought about how futures work with respect to margin and marking at the end of the trading day you need to know that you can be required to deposit more money into your margin account if the futures trade moves against you on any given day. This means the marking price is very important and lost of institutional money is worried that the exchanges are easy to manipulate. see: http://openmarkets.cmegroup.com/3785/understanding-margin-changes http://openmarkets.cmegroup.com/3785/understanding-margin-ch... > Nasdaq’s product will reinvest proceeds from the spin-off back into the original bitcoin in a way meant to make the process more seamless for traders, the person said. This is awesome,, right now the CBOE and CME both have punted on the question of forks saying, they'll have a best efforts to figure it out.
- Kiro 9y agoOne difference is that NASDAQ is a name everyone in the world knows while CME is fairly anonymous. Yes, I know they are bigger but I can assure you that if you ask random people in my country most would know NASDAQ while very few would know CME. Seeing NASDAQ is adding it will add to the hype.
- hendzen 9y ago"CME is fairly anonymous". What planet do you live on?
- igorgue 9y ago>> "Yes, I know they are bigger but I can assure you that if you ask random people in my country most would know NASDAQ while very few would know CME" Just go out to a target and ask 5 people... Unless you live on mars already.
- fragsworth 9y agoHopefully it's not cash settled like the CME. That is the worst idea ever, and will probably cause a lot of people to get screwed over by market manipulation. Especially since the CME is basing the cash settlement price on a single exchange: GDAX. Anyone can go to GDAX and crash or spike the price for one minute at 4:00pm any day and trigger a bunch of margin calls on the CME. Especially considering how easy it is to make a bitcoin transaction (compared to things like wheat, or oil...) it really should be "bitcoin settled".
- wmf 9y agoIt's not just GDAX: http://www.cmegroup.com/trading/cf-bitcoin-reference-rate.html http://www.cmegroup.com/trading/cf-bitcoin-reference-rate.ht...
- fragsworth 9y agoOh, I didn't realize. At some point I read it was just GDAX. Even still, cash settlement is terrible.
- wpietri 9y agoWhy's that? For some derivatives, cash settlement is the only thing that makes sense. E.g., look at their weather derivatives. It's not like anybody wants to take delivery on a petagram of cold air. The majority use case for Bitcoin isn't using Bitcoin at all. It's speculating on Bitcoin. Those people definitionally don't care about Bitcoin for its own sake. I'm pretty sure the exchanges are offering these not because anybody actually has forward needs to buy or sell Bitcoin, as they would with, say, wheat. People just want to speculate. For those people, cash settlement is exactly what they're after.
- misja111 9y ago>> it really should be "bitcoin settled". Sorry but you can't have futures on bitcoins that are settled in bitcoins.
- 9y ago
- virtuexru 9y agoAh yes Bitcoin; the completely useless electricity waster is finally hitting Wall St. I wonder how the futures will affect price & how much of it will be settled in actual BTC vs USD. AM I DOING THIS RIGHT HACKER NEWS? LUL
- deadmetheny 9y ago>how much of it will be settled in actual BTC vs USD Exactly none of it, considering that Bitcoin as a currency is fairly useless unless you're buying drugs or you're a botnet operator.
- macromage 9y agoFairly useless unless you're part of a roughly $1-trillion dollar[1] global industry, you mean? [1] https://en.wikipedia.org/wiki/Illegal_drug_trade https://en.wikipedia.org/wiki/Illegal_drug_trade - Take the 2003 figure as a % of world GDP, apply to today's world GDP.
- deadmetheny 9y agoAh yes, I'm sure all the people trading on Bitcoin futures are getting paid in Bitcoin and re-investing into the illegal drug market.
- macromage 9y agoI don't see how that relates to the point you were making. Clarify? > Bitcoin as a currency is fairly useless unless you're buying drugs or you're a botnet operator You claim that Bitcoin is useless. This was to justify the point you made before (nothing will settle in Bitcoin) or maybe as a cheap dig. Either way, your statement as it stands is worded to be condescending and confusing. It's like saying "Mouthwash is fairly useless unless you don't want bad breath." Turns out, the market for people who don't want bad breath is pretty big. Calling it useless is wrong.
- 9y ago
- londons_explore 9y agoCan an expert explain for the less informed: * Do futures markets typically stabilize the price of a commodity? * Who loses out if a futures contract can't be fulfilled (for example due to lack of liquidity in the underlying market)?
- koolba 9y ago> Do futures markets typically stabilize the price of a commodity? Kind of. It doesn't necessarily stabilize the prices of the commodity so much as allow the transferring of the risk associated with price movements. > Who loses out if a futures contract can't be fulfilled (for example due to lack of liquidity in the underlying market)? The exchange acting as the clearing house is on the other side of each contract so they'd be left holding the empty bag. Exchanges deal with this by settling futures daily (so net cash movement based on current price) and by setting margin requirements on the members buying or selling contracts. The margin requirements vary based on the volatility of the future and for something like Bitcoin I wouldn't be surprised if was 100%. What's particularly cool / safe (and interesting if you're a finance nut) about futures vs. actual trading of Bitcoins is that there is zero crypto involved. Everything is cash settled in dollars.
- slg 9y agoThere was a 4 hour stretch this morning in which Bitcoin lost over 20% of its value. In the last 45 minutes it is up 13%. I wonder what a long straddle would cost on this thing.
- g09980 9y agoBitcoin has recovered from dips really well in the past weeks due to major buy pressure. Unfortunately GDAX (and Coinbase), Gemini, and other exchanges all went down at the same time this time around, making it impossible to buy the dip.
- zeep 9y agowith Coinbase, the best I could do is buy @ 9400 and sell @ 9800 ...lost money because of their bad servers (for some reason downtime only happens when Bitcoin's value drops a lot)
- eternalban 9y ago> Unfortunately GDAX (and Coinbase), Gemini, and other exchanges all went down at the same time > Conveniently GDAX (and Coinbase), Gemini, and other exchanges all went down at the same time
- deleted 9y ago[deleted]
- moreless 9y agoNot sure why you are being downvoted - very precisely (and probably accurately) conveyed what was happening. What are the chances of all these exchanges having trouble at the same time? I'd really like to see postmortem on this.
- eternalban 9y agoBecause it is an emotional topic. There are various, arguably valid, orthogonal aspects that motivated the technology behind distributed ledgers. And when those utopian dreams are subjected to the cold hard facts (of this world) it elicits a non-rational response. That is the positive view of this group-mind phenomena. The negative view would posit that voices that point out that "the emperor has no clothes" can derail what very much appears to be a pyramid scheme.
- mads 9y agoMan, this is just weird. I just bought 0.05 Bitcoins (you know FOMO and all that) and it just feels so much more empty than back in the days when I mined them myself with my brand new dual Xeon CPU and later on was thinking grand thoughts and building little projects with epaper ink displays to display QR codes on small devices that would work on low bandwidth connections and maybe offline. Lots of problems to be solved back then, but Bitcoin is just the same now. Nothing was solved. No progress and scams everywhere and people being all religious about Bitcoin. Every man for themselves and to the moon... These days I am even getting scam calls from something called the Bitcoin Academy with people cheering in the background, when it reaches the all time high. No kidding... I have no idea what to do with my 0.05 BTC. Just let them sit there, I guess as a curiosity of old days. I don't really feel that I fit into the moon community and I don't really feel I want to build anything around this tech just because it is not about tech anymore. Had lots of Bitcoin sift through my hands. Anyone remember the Bitcoin faucets? Those were the times. Sincerely, One of the first 1000 users of MtGox (proof in the leaked MtGox database :P)
- megaman22 9y agoShit, somebody gave me 0.05 BTC a few years ago to go to a talk about what it was all about. Hopefully I still have that paper wallet, it must be worth close to $500
- mads 9y agoSounds about right. I paid 500 euros for my 0.05BTC piece of history (there were some fees and all that of course). Maybe I just bought a piece of something like the Berlin wall and when everything goes to shit and this whole train wreck evolves into something more sane later on in 100 years or whatever, my grand children can sell my 0.05BTC on Sothebys or something :D ..
- ashark 9y agoI got .20-someodd (.28, maybe? Maybe have even been in the .3 range.) years ago from spigots and a very brief experiment with mining, then thoughtlessly formatted right over the damn hard drive with the wallet on it and went "oh well, not like it's worth anything". Don't suppose there are any low-level wallet-finder tools out there in case it hasn't been overwritten? It's finally worth a couple days to give that a shot on all my old hard drives (I forgot which one it was long ago, which is part of why it hasn't been worth it so far).
- junkscience2017 9y agoinevitable that this will turn into another taxpayer bailout, somehow
- phkahler 9y agoThis makes me laugh and cry at the same time. Using tax dollars to bail out the big guys who bought derivatives based on a virtual currency would be such a cliche.
- WJW 9y agoFor all the complaining on HN about accredited investors, this is exacatly why they were invented in the first place: because there was too much speculative investment available to people who subsequently invested more than they could afford to lose. The big guys have the power to get a bailout but the small guys are the ones that starve to death because they can't.
- phkahler 9y agoThat's all backwards. The little guys are supposed to need the protection. The big guys are said to be smart enough to know what they're doing and not need protection.
- chii 9y agoAnd yet, it's the small guys's tax dollars bailing out. But the small guys's hardly net any of the profits if the big guys scheme succeeds.
- LeoJiWoo 9y agohttps://twitter.com/officialmcafee/status/935900326007328768 https://twitter.com/officialmcafee/status/935900326007328768 Well John McAfee thinks bitcoin will hit 1 million by 2020.
- lern_too_spel 9y agoPump and dumpers gonna pump and dump. https://medium.com/@DEFCON_2015/why-mgt-was-delisted-from-nyse-amex-b919093f1e59 https://medium.com/@DEFCON_2015/why-mgt-was-delisted-from-ny...
- KasianFranks 9y agoOr, large investment banking houses will step in and create naked shorting opportunities to inflate sell pressure creating 'death spirals' to drive prices down and scoop them up and extreme discounts. This happens in the traditional public markets everyday.
- zenlikethat 9y agoThere’s decent chance big money of some form is behind this recent increase anyway.
- westurner 9y ago> Or, large investment banking houses will step in and create naked shorting opportunities to inflate sell pressure creating 'death spirals' to drive prices down and scoop them up and extreme discounts. This happens in the traditional public markets everyday. Is there a term for this?
- KasianFranks 9y agoYes, this can happen in a few different ways and is the reason why Ycombinator created SAFEs. When you have a public company you will get offers for what are called "credit lines", "debt financing" or "convertible notes". They are traditionally used to create death spirals https://www.investopedia.com/ask/answers/06/deathspiralbond.asp https://www.investopedia.com/ask/answers/06/deathspiralbond.... as the size of your float increases by you, executive director (CEO/CFO), as a public company "issuing" more stock to cover the loan. The more you issue, the less you're worth until somebody comes along scoops you up and re-engineers the cap table which is a restructuring. However, manipulation can occur within institutions as well: https://news.ycombinator.com/threads?id=KasianFranks&next=14592122 https://news.ycombinator.com/threads?id=KasianFranks&next=14...
- asdjasldkjkljd 9y agoHolding on to the .25 BTC I bought for $20 while rubbing my hands together and whispering "yes, yes"
- dailyvijeos 9y agoTulip bulbs anyone?
- brianorwhatever 9y agodefinitely wouldn't trade my BTCs for those
- anonymous5133 9y agoI'm taking it you are mad you didn't get in early, huh lol?
- quickthrower2 9y agoI don't know about him but I'm mad. Of course I'd have to have got in early and had the balls not the sell, not lose the keys, not get hacked and not leave them on an exchange, for years.
- cwkoss 9y agoI think one of the most important skills in trading is realizing the impossibility of 'ideal' trades. Perfectly buying at the bottom of a dip and selling at the top are both very RISKY trades, particularly if trading with your whole stake: you don't have much information to indicate that the market is changing and could have been very wrong. I think the healthiest perspective is just to compare investment vs. return in dollars. If you're beating the broad market, you're doing fine and should be happy. If you think about what you could have done with perfect hindsight, you'll just make yourself miserable.
- quickthrower2 9y agoThe difference with bitcoin is the price increase from 1c / BTC to $10,000 means at many points someone could have purchased $1000 in BTC and been left with enough to retire. I don't think anything else has had that levels of "returns"
- 9y ago
- bochoh 9y agoSo here's a scheme that could be used to wildly profit in the fiat market. If you're what is considered a bitcoin "whale" holding millions worth of the currency you would just setup a short on bitcoin futures. Then you initiate a large sell from a well known whale wallet. This would trigger a large sell as stop losses are triggered. Profit then re-buy the dip.
- lsseckman 9y agoPrice wouldn’t drop unless you actually sold.
- bochoh 9y agoThe trick here is that the whale does sell but profits in Fiat. Then using those profits you can buy the now cheaper Bitcoin. Wash, rinse, repeat.
- superbrama 9y agoDepending on what market makers are up to, this will work or won’t. Trend would be towards eventually not working if it does at all. Difficult to say how liquidity differences will affect ability of your strat to work.
- nether 9y agoStep 1: Be a multimillionaire
- runeks 9y agoSo, free money? I welcome them to try. If anything, this would reveal the problem of trading with leverage. There’s no guarantee that the market won’t start buying into the whale’s sell, because the market thinks the price is low. But if it works, it’s the leveraged traders who have a problem, and they deserve to be wiped out, in my opinion. Furthermore, it’s already possible to go short on several exchanges, so if this worked like magic it would be happening right now.
- tonetheman 9y agoSeriously the top comment here should, WUT THE FK! Man we should instead of trading bitcoins trade fish in World of Warcraft. Insane times we live in.
- yclept 9y agoYou may be interested to know the creator of the crypto currency exchange Kraken was CEO of Lewt Inc. Many of the people involved in virtual item shop businesses over the past few decades are prominent holders and founders of crypto currency businesses and schemes.
- stevespang 9y agoYup, they all smell money.
- richardw 9y agoEek. Add leverage to BTC? Now fortunes can be made and lost on micro movements. Prefer buy and ignore for a decade. Still a trade rather than an investment but at least you can only lose what you put in. BTC moved 20% down in the last 24 hours. That's like a market crash in old money. Leverage that and life will get exciting, fast.
- chx 9y agoWhat is the difference between Bitcoin futures and gambling?
- 98Windows 9y agoIt's still gambling in a sense however there is a major difference in the type of randomness you are exposing yourself to. At a casino or when playing cards it's very easy to compute probabilities of all possible events - hence the house always wins. Here in order to compute the probabilities of price movements you'd need to model millions of human agents across dozens of markets. So unless someone has a lot of insider information, you have a decent chance of making some money.
- chx 9y agoOr lose a lot of it?
- alex_duf 9y agoI thought BTC going above 10000 was the end of the bubble, but with announces like that it's just the beginning. Each time it grows I fear bigger damages... But I also hope I'm wrong and I'll be just proven to be a fool for not having a bigger amount of bitcoin (I mined some back in the days)
- argo_ 9y agoIf the bitcoin price was increasing linearly people would not be blaming the technology so much. Rapid exponential growth followed by abrupt decline in repeated cycles makes people confused.