6 ms·

You bring up a very important but often overlooked point about market panics: the problem is not really everyone rushing for the door, it is market makers pulli

You bring up a very important but often overlooked point about market panics: the problem is not really everyone rushing for the door, it is market makers pulling bid liquidity so that “normal” selling volumes tank the price (which triggers the avalanche).

qeternity 5y ago
What? Who told you this? Market makers, especially in crypto, do not have long holding periods. The big moves in crypto are because of coordinated manipulation to trigger stops and liquidations (forced, price insensitive buying and selling). I don’t know if this is /r/wsb leaking but markets do not tank because market makers pull back…that’s just not the business they are in.
- m3kw9 5y ago
  Yeah they delta hedge anyways so no need to pull back
  - qeternity 5y ago
    On options, yes. But in delta 1 products is not always so easy. They are often legitimately just market making.
- quickthrowman 5y ago
  If tether crashed I guarantee every MM would pull their bid, nobody wants to be left holding the bag. I don’t care if they’re obligated by contract to provide a bid/ask at all times—if USDT went bust, BTC/USDT liquidity would evaporate very quickly. The contract would be irrelevant since the exchange would die. Either that, or their bid will be 0, like on 0DTE options that are far out of the money.
  - qeternity 5y ago
    Yes, I agree. But if all MMs withdrew but you had lots of other stickier liquidity, spreads might widen but it would cause a crash. Of course if Tether implodes, all the long term buyers will evaporate, which is my point: medium/long term price is dictate by swing and positional traders, not market makers. > Either that, or their bid will be 0, like on 0DTE options that are far out of the money. What? This doesn’t make any sense. 0dte options are often some of the most actively traded. But I’m not really sure you get this stuff. Source: career hedge fund options trader
    - quickthrowman 5y ago
      > What? This doesn’t make any sense. 0dte options are often some of the most actively traded. But I’m not really sure you get this stuff. Did you miss the “far out of the money” part of my comment? What’s the bid/ask on the Oct 8 SPX 4550C going to be at open tomorrow, assuming SPX opens around 4400? Bid 0.00, Ask 0.05 I also understand there is resting (and possibly hidden, depending on the order types allowed by the exchange) liquidity on the order book that would be there if USDT collapsed and MMs pulled out, but how long do you think it would take for orders to evaporate for an asset that is rapidly approaching a 0 dollar valuation? I’m just a dumb amateur, but I have a basic grasp of the mechanics.
      - qeternity 5y ago
        > What’s the bid/ask on the Oct 8 SPX 4550C going to be at open tomorrow, assuming SPX opens around 4400? Bid 0.00, Ask 0.05 Minimum price tick == 0.05 on ES options. I would sell you some for 0.01 but Globex won’t let me.
        quickthrowman 5y ago
        I’m not buying any 4550Cs. You do understand my original comment chain was talking about a complete tether collapse where it has 0 value and not just a temporary dip in price.. right? Go read arcticbull’s comment about 6 levels up, that’s the scenario I was referring to in my comment. I’ve traded both ES and SPX options so you can stop quizzing me about them. By the way, minimum price tick on ES options is .25 (which is $12.50) lmao. If you don’t believe me, look at the option chain, mr career hedge fund options trader guy (your words, not mine).

qeternity 5y ago

What? Who told you this? Market makers, especially in crypto, do not have long holding periods. The big moves in crypto are because of coordinated manipulation to trigger stops and liquidations (forced, price insensitive buying and selling). I don’t know if this is /r/wsb leaking but markets do not tank because market makers pull back…that’s just not the business they are in.

m3kw9 5y ago
Yeah they delta hedge anyways so no need to pull back
- qeternity 5y ago
  On options, yes. But in delta 1 products is not always so easy. They are often legitimately just market making.
quickthrowman 5y ago
If tether crashed I guarantee every MM would pull their bid, nobody wants to be left holding the bag. I don’t care if they’re obligated by contract to provide a bid/ask at all times—if USDT went bust, BTC/USDT liquidity would evaporate very quickly. The contract would be irrelevant since the exchange would die. Either that, or their bid will be 0, like on 0DTE options that are far out of the money.
- qeternity 5y ago
  Yes, I agree. But if all MMs withdrew but you had lots of other stickier liquidity, spreads might widen but it would cause a crash. Of course if Tether implodes, all the long term buyers will evaporate, which is my point: medium/long term price is dictate by swing and positional traders, not market makers. > Either that, or their bid will be 0, like on 0DTE options that are far out of the money. What? This doesn’t make any sense. 0dte options are often some of the most actively traded. But I’m not really sure you get this stuff. Source: career hedge fund options trader
  - quickthrowman 5y ago
    > What? This doesn’t make any sense. 0dte options are often some of the most actively traded. But I’m not really sure you get this stuff. Did you miss the “far out of the money” part of my comment? What’s the bid/ask on the Oct 8 SPX 4550C going to be at open tomorrow, assuming SPX opens around 4400? Bid 0.00, Ask 0.05 I also understand there is resting (and possibly hidden, depending on the order types allowed by the exchange) liquidity on the order book that would be there if USDT collapsed and MMs pulled out, but how long do you think it would take for orders to evaporate for an asset that is rapidly approaching a 0 dollar valuation? I’m just a dumb amateur, but I have a basic grasp of the mechanics.
    - qeternity 5y ago
      > What’s the bid/ask on the Oct 8 SPX 4550C going to be at open tomorrow, assuming SPX opens around 4400? Bid 0.00, Ask 0.05 Minimum price tick == 0.05 on ES options. I would sell you some for 0.01 but Globex won’t let me.
      - quickthrowman 5y ago
        I’m not buying any 4550Cs. You do understand my original comment chain was talking about a complete tether collapse where it has 0 value and not just a temporary dip in price.. right? Go read arcticbull’s comment about 6 levels up, that’s the scenario I was referring to in my comment. I’ve traded both ES and SPX options so you can stop quizzing me about them. By the way, minimum price tick on ES options is .25 (which is $12.50) lmao. If you don’t believe me, look at the option chain, mr career hedge fund options trader guy (your words, not mine).