http://youtu.be/mjiX7xiFD-o if you actually want to watch it. I hope you don't.

A few of you have been messaging me wondering if and when I was going to post this. Well, here it is. For the rest of you who don't know what this is I'll fill you in... Some time back in late November after a night of drinking with some friends I came home and decided to check out /r/bitcoinmarkets to talk about Bitcoins. As you can see in this thread I was so sure of my drunken predictions that I offered to eat a hat on video with ketchup if I was wrong. Well, I was wrong. Bitcoins and alcohol don't go well together. Lesson learned. I decided that I would actually go through with eating the hat but when it came down to it I always had something else I either needed or wanted to do in my free time instead. In this thread you can see I got called out for not posting the video so I reached out to /u/seansoutpost to hold some of my bitcoins ransom for me until I actually did it. Sorry it took me so long to get around to it. Jason I know you're a busy man so whenever you get around to it is cool. PM me for an address. Shout-out to my dear friend Collider6 for doing the editing on the video.

So, long story short, I started trading a year ago, been margin longing the whole run from 1k to 19k ( sometimes closing the top, sometimes closing too early or too late, but always making profit)

I turned 3 lowly btc which I had from playing poker (at the time 3k) into nearly 200 BTC which was almost 4 million at the top and would be 2 million at current prices.

I thought I was a trading genius, a god, whatever. Anyway, this is where the sadness starts.

After the dump from 19k to 11k I went long at the bottom, and kept adding to my position on the bounce to 12k 13k, 14k. Then, at the 16k dead cat, my position was a further 100 BTC in profit. Instead of closing then and having a total 300 BTC, I increased leverage and increased my position size. This entire position was liquadated on the drop back to 12k, because my entry had moved up so much. I lost 100 btc paper profit and nearly 50 BTC margin. I was devasted, and down to 150 BTC total.

After evaluating the situation, I came to the conclusion that the pump to 16k was a dead cat and that we are going lower. Therefore I shorted. At 12k. Added at 13k. Added at 14 and 15k. Got liquidated at the top at 17k. Another 50 BTC loss. Down to 100.

Think, ok we made a higher high at 17k, uptrend back on. Went long. Got liquidated at 13k.

50 BTC left. Devastated, unsure, no clue whats going on. Sat through the drop to 9k, when we bounced I thought it could be the bottom. Longed at 11500, panic closed 10500. When we went to 13k I was kicking myself for panic closing, went long at 12800.

Liquidated this morning for my last bitcoin.

3 BTC to 200, to 0

At this time I am still in shock, the last few months Ive neglected relationships and school, and Ive been daydreaming about living the high life rich as fuck with my millions.

Now, I am nowhere.

Posting this so others dont gamble away life changing money. Dont want donations or tips not posting an address dont PM me. I never want to hear the word btc again because I want to forget

Throwaway for obvious reasons. Please help me get my $200,000 back. I've opened a support ticket, I've emailed [email protected], I've PMed the official Coinbase reddit accounts, and I tried Twitter DMs. If anyone from Coinbase is reading this, Case ID: [redacted].

I did an overnight transfer of $200,000 to Coinbase on 5/30. The amount was never credited to my account so I opened a support ticket. They got back to me two weeks after the transfer, on 6/12. It turns out my bank (BoA) did the transfer as an overnight ACH, which Coinbase does not support. The 'specialist' assigned to my ticket told me that my bank needed to recall the ACH transfer.

I immediately called the BoA Commercial Banking team (we all talk shit about the banking system, but at least they have phone lines...) and asked them to recall the ACH. BoA told me that the governing body for ACH transfers prevents recalls if more than 1 week has passed since the transfer. They confirmed that the money was successfully transferred to Coinbase's bank account and gave me a trace ID so that Coinbase would be able to confirm the transfer. I sent the info over to Coinbase support and never heard back.

Now here I am, 4 weeks later, still waiting for Coinbase to get their shit together. I understand that their support team must be swamped with requests right now, but this is ridiculous. What kind of organization 'loses' $200,000 in their bank account and doesn't sort it out within 1 month?

Regarding Coinbase not supporting overnight ACH transfers:

• Is this in Coinbase's documentation anywhere? Nope.

• Do they accept other types of ACH transfers? Yup.

• Is there a good reason to not support overnight transfers? As far as BoA can tell me, no. No there is not.

Edit: For everyone wondering why I'm posting on reddit instead of lawyering up, it's because fixing my problem will only take a Coinbase employee 5 minutes. I'm asking reddit for help not because I think reddit will solve the problem for me, but because I hope a Coinbase employee sees this post. I will definitely contact a lawyer if this isn't resolved soon. Thanks for all your support.

[6/28@3pm PDT] Edit: Still no response from Coinbase. The support ticket says "Updated: Jun 28, 2017 08:55AM PDT" but there is no new message. I think this means someone at Coinbase saw the reddit post and marked the ticket as high priority but didn't bother to respond.

[6/28@5pm PDT] Edit: Coinbase has responded to the support ticket. They gave an explanation for their ACH system and said the money has been returned to my account and will "show up within a few business days". I will make a final update when the $200,000 shows up in my account.

[6/30@7am PDT] Edit: The $200,000 has been returned to my bank account. Thanks for the support and visibility reddit.

I have a pretty crazy theory that I want to share but hopefully I won't break the record for downvotes in the process.

I have been thinking for a while that something seems suspicious about the way the market has been moving lately. Isn't it strange how most of the coins pumping are all "cheap" as in they are less than $10 per coin? Isn’t it strange how the crypto market cap grew by $58 billion today, but Bitcoin’s market cap did not change at all? Then I had a realization. What if everyone is being played by a greater power. If you don’t like conspiracy theories stop reading now.

Everyone has been justifying the altcoin surges as Bitcoin taking a rest and dumb money chasing “cheap coins”, but what if it is actually institutional investors using alt coins in order to accumulate Bitcoin. It makes a lot of sense. If you look at the dates the surges started

• XRP - December 8

• XLM - November 27

• IOTA - November 6

• ADA - November 27

• XEM - December 8

The futures trading press release went out on December 1, but what if some people knew that it would be approved ahead of time? If you are an investor with deep pockets you have a problem. You want to be able to bet on Bitcoin’s future price, but you don’t own enough Bitcoin to be able to manipulate the market (it is much easier to gamble when you control the outcome). You need a way to accumulate. Articles start to hit the press about how a small group of whales control a huge amount of the supply of Bitcoin and that makes it dangerous, etc. Big players are trying to convince people that Bitcoin is not a safe investment. Lots of bubble talk spreads. Jim Cramer says you are better off going to Vegas than buying Bitcoin. It doesn‘t scare the public away.

These investors are usually the ones who get first stab at new assets. They get to invest early in companies, they get first stab at IPO shares when a company goes public, but with Bitcoin they are late to the party. How are they going to accumulate? They aren’t stupid. They realize that driving the price of Bitcoin down too much to buy cheaper will scare people away from the market, and there is a limited amount of downside (it can only go as low as $0), but there is an infinite amount of upside. They also don’t own enough Bitcoin to crash the market that far. So what do they do?

The answer is: find alt coins that are “cheap”. They know that if someone has to choose between a $15,000 dollar coin and a $1 coin they will choose the $1 coin every time. It is a psychological thing. Everyone just looks at the price and believes that $1 coin can also go to $15,000 one day. So if institutional money starts to buy up huge amounts of these “cheap coins” and gets the general public on board, they can then accumulate huge amounts of Bitcoin without the Bitcoin price changing at all because alt coins trade against Bitcoin! If you want to quadruple the amount of Bitcoin you have, it is much easier to pump up a smaller coin and sell it, than it is to drive down the Bitcoin price 4x to accumulate more for the same amount of USD.

Take a look at some of the headlines lately. I suspect the press releases are also coordinated:

• RIPPLE to become the new BITCOIN? Surge in new cryptocurrency as banks FAVOUR it

• Bitcoin latest: Ripple’s XRP is best-performing cryptocurrency with 380-fold increase in 2017

• Bitcoin price WARNING: The cryptocurrency will burn out in SPECTACULAR CRASH

• Bitcoin is Akin to Gambling, Causing Egypt to Ban It

In addition to these alt coin surges, every time Bitcoin looks like it is going to break out a new sell wall appears and some market selling into the buys begins to drive the price back down. To me this is a very well executed effort to hold down Bitcoin’s price while accumulating more by pumping alts. I noticed earlier today a $1 million buy wall on XLM that was moving up as the price increased. Is that how a normal person would buy up XLM? It is possible, but I doubt it.

I know it seems wild, but if this theory is correct then it means at some point there will be a pretty fantastic dump with alt coins and a giant surge for Bitcoin.

Of course, I could also just be thinking crazy thoughts.

Also on steemit: https://steemit.com/bitcoin/@ccampbell/bitcoin-manipulation-theory

but especially the guy victoriously proclaiming that the correction is over.

By Chris Dunn

1 - Everyone’s a genius in a bull market. Real traders can survive and even thrive in bear markets or highly volatile markets.

2 - Don’t be a blind bull. ALL markets are cyclical. Don’t be afraid of pullbacks or market crashes – that’s where you can make the most money.

3 - There’s a big difference between a trade and an investment.

4 - Fully plan your trade before you pull the trigger on the entry.

5 - Entries are important, but risk & money management is where you make or lose money.

6 - Beware of get-rich-quick gurus hopping on the crypto bandwagon over the past year.

7 - Decide which types of trade setups or investments you’ll take and ignore everything else.

8 - Don’t assume just because you’ve made a lot of money in crypto that you can just as easily make money in other financial markets. 95%+ of stock market traders LOSE money. The game is rigged. Stick to what you know works for you.

9 - The best way to day trade cryptocurrencies is – DON’T!

10 - The best way to profit in any market is to find something you think has big potential early (before the general public catches on), and invest assuming you’re going to lose 100% of your capital. It’s the “angel investor” approach.

11 - You can’t control the market. The only thing you can control is your entries, trade size, and exits.

12 - One market participant can completely destroy “good technical analysis”.

13 - Don’t blindly follow trade alerts from ANYONE, especially random people on social media or chat rooms.

14 - All financial networking marketing projects are ponzi schemes, period.

15 - If you make a life-changing amount of money, do NOTHING for at least 30 days.

16 - Trading isn’t about picking exact tops and bottoms in a market – it’s about catching the meat of a move.

17 - Don’t turn a small losing trade into a massive losing investment.

18 - Don’t set daily profit target goals – set long-term performance goals.

19 - Learn to survive, then thrive.

20 - The best charting indicators are price action and volume. You can use others, but it won’t necessarily make you a more profitable trader.

21 - Trends can go way past what seems rational.

22 - Don’t try to pick tops in a market. Wait for the market to tell you when the trend is over.

23 - Don’t trade in front of big news events – it’s impossible to predict how markets will react.

24 - The biggest challenge for most traders is their ego, or the need to be right.

25 - You can lose 50% of your trades and still be profitable if you manage risk properly.

26 - The best entrepreneurs and CEO’s typically make the worst traders and investors.

27 - People with the best mindset for investing typically have a career in high-risk situations like firefighters, pilots, police.

28 - Avoid pump and dump groups like the plague they are.

29 - You WILL make every mistake in the book. Don’t beat yourself up when you make mistakes, just learn and try not to make the same mistake twice.

30 - Don’t treat crypto exchanges like bank accounts. You don’t own the coins unless you control the private keys.

31 - Crypto is a 24/7/365 market. You can’t catch every trade. If you miss one, don’t worry – there’s ALWAYS another trade.

32 - Don’t invest in a coin unless you understand it inside out.

33 - You can make money trading the momentum and hype in shitcoins, just don’t invest long-term.

34 - Stay away from coins with low trading volume and low market caps. They are easily manipulated and you can get stuck in a position.

35 - Don’t trade with money you need for living expenses. It’s called “risk capital” for a reason.

36 - Think of yourself as a hunter – save your ammo for the big game.

37 - Crypocurrency exchanges go down when there’s high volatility. If price hits a major target or buy zone, it might make sense to place some orders BEFORE everyone else.

38 - Trading and investing brings all your emotions to the forefront – fear, greed, hesitation.

39 - The hardest thing to do in trading is… NOTHING. This can also be the most profitable thing to do.

40 - Just because a market is in a “bubble” doesn’t mean it’s going to die. Bitcoin has been through over half a dozen big bubbles and increased in price after each one.

41 - Manage your trades in a way that would leave you with no regrets no matter what the market does.

42 - Learn to think like a contrarian. If you’re someone who needs to have your opinion validated by everyone around you, then trading and investing isn’t for you.

43 - The shorter the chart time frame, the less reliable the chart patterns are. The longer the time frame, the more variables affect price action and the harder it becomes to predict price. My sweet spot in the daily chart for trade setups and 60-minute chart for entries.

44 - Some market conditions are great for pushing the gas on every trade setup you can find, where other market conditions call for you to slam on the brakes and step away from the markets altogether.

45 - 90%+ of cryptocurrencies will eventually go to zero. Invest accordingly.

46 - The mental side of trading is the hardest to master, the most under-appreciated skill, and will cause you to make or lose the biggest amounts of money.

47 - The 3 biggest problems for traders are over-trading, hesitating on entries, and closing positions prior to profit targets when the trade is still intact.

48 - You can make a career’s worth of profit in one year or one trade – don’t feel like every day has to be a home run. Play the long game. Be patient and wait for the best plays.

49 - Don’t trust anyone else to trade for you. Manage your own high-risk investments (like crypto trading) or don’t participate at all.

50 - Take the news for what it is – they’re trying to get views and clicks. They’re NOT looking out for your best interests or trying to help you make money.

Welcome to the /r/BitcoinMarkets daily discussion thread!

Thread topics include, but are not limited to:

• General discussion related to the days events

• Technical analysis

• Trading ideas & strategies

• Questions that do not warrant a separate post

Thread Guidelines

• Be excellent to each other.

• Please do not create separate posts for the types of discussion mentioned above outside of the daily thread. If you do, your post may be removed and/or heavily downvoted.

• News that may have a big impact on the market may be posted as a separate thread.

Other ways to interact

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So, basically today I lost 40k USD I had at an exchange called Bitgrail and so did a lot of people (https://bitgrail.com/news).

What happened? Bitgrail has been one of the first exchanges to add RaiBlocks (now rebranded as NANO) for trading. Also there were BTC, BCH, BTG, ETH, LTC and a few others.

Yesterday, they disabled deposits and withdrawals of ALL coins, as well as the trading of NANO/BTC. But problems with withdrawals have been happening since the first days of January. They were disabled for a long time, then all of sudden nobody could withdraw if they didn't have a verified account. And even if you had a verified account, there was a limit of 10 BTC/day.

Just a few hours ago, apparently they found out 17 million NANO were stolen, although there's some evidence claiming they have been insolvent since ~November.

In my case, I was day-trading, and that's why I had my money in there, but with this I've learned is better not to have 100% of your money in just one exchange (although it wasn't really possible to withdraw for the past few weeks).

I know it's not 100% related to Bitcoin, but just wanted to remind people not to leave any kind of coins in any exchanges if you are not trading. And if you are, don't be like me and don't put all your money in one place.

https://www.trustnodes.com/2018/03/07/mt-gox-trustee-sold-half-billion-dollars-worth-bitcoin-bitcoin-cash

https://www.trustnodes.com/2018/03/07/mt-gox-crashed-bitcoin-trustee-sold-bottom-blockchain-data-reveals

On December the 22nd, the trustee moved 6,000 bitcoin. That’s the big red daily candle above labeled 2, sending price from nearly $16,000 to a brief low of $10,800.

It appears he gave some time for the market to recover, then on the 17th of January at 3AM he sold 8,000 bitcoins. Crashing the market again.

He then sells another 6,000 on the 31st of January, but the vast majority was sold on the 5th of February, 18,000 in total. Sending the price to its recent bottom from which it then went on to recover and nearly double as the selling finally stopped.

This suggests the trustee has sold it all on exchanges, rather than Off The Counter (OTC), sending price down some 75% by perhaps placing market orders.

The fucking asshole places market orders no less.

I know you guys don't care and will keep shorting bitcoin anyway, but just so you know, a little over an hour ago the El Salvador senate (yes, past midnight) voted to make Bitcoin Legal Tender.

https://twitter.com/nayibbukele/status/1402508938415939593

The articles of the bill say that in 90 days from the publication of this bill (assuming today) everyone in the country must accept bitcoin as currency for all debts both public and private. It says that there is no capital gains on bitcoin there because it is a currency. It even says that there will be some sort of a fund holding reserves of bitcoin!

On a twitter moments call going on at the time of voting El Presidente called the fund a clearinghouse, and suggested it will be $150 million worth to start out. He answered tons of questions on that call, you'll definitely want to get your hands on the transcript when someone publishes it.

Bottom line: El Salvador is buying ~$150mm worth of BTC to add to its treasury very soon and everyone in El Salvador (7 million ppl?) will all be carrying bitcoin on their phones in 90 days from now and paying for everything over the lightning network.

Also, I wonder how many altcoins were selling themselves as a form of money... Bcash, Dash, litecoin, etc... What use will they have once lightning network BTC is literally legal tender in millions of users hands?

We have had a crazy bull run since thanksgiving, lots of FUD just because of a 20% pullback when we are up 18x this year.

When the Robinhood app announced they would be allowing crypto purchases, a few news sites heralded this news as a way for millions of new people to start pumping money into crypto. At the time I didn’t really believe it, and as it turns out I was right. And the reason is simply because the general public has lost interest in cyrpto for the time being. Even though all of us in the crypto echo chamber still think it’s the biggest thing in the world, the general public has a much different view and only when Bitcoin breaks $20K will that change.

The sentiment of the general public has very much changed from late 2017 when virtually anybody you met was thinking about buying some Bitcoin or had already bought some. Even grandparents who can barely use a modern phone were asking family members about this “Bitcoin thing” they keep hearing about.

But in this modern age, things come and go faster than ever. And for now, most of the public doesn’t care that Bitcoin has already doubled from its low of around $5K. All they think is Bitcoin crashed from $20K. So right now, it is considered a loser unless you bought a long time ago. The notion of getting rich by buying Bitcoin now is not really a part of the narrative anymore among the general public.

The reason I bring this up, as it may not seem important, but if you are looking for another 2017 style bull run, it’s very important. You won’t get another “alt season” unless the general public starts buying and trading again. And for that to happen, Bitcoin needs to approach and break $20K. The public doesn’t care about blockchain and whether or not some company says they are looking into blockchain. Nobody in the general public cares about that and they never will. It’s the price that brings in new money, not the tech. And not until the price comes back and breaks $20K will the general public catch the fomo.

http://jamescrypto.com/the-general-public-wont-care-about-crypto-again-until-bitcoin-breaks-past-20k/

What are your thoughts on this? Its difficult to argue against when we look at the current market conditions:

• Total market cap is going sideways around 450 billion for a while now, no new money is actually entering

• The rise in Bitcoin recently is simply bleeding from alts, not new investors putting money in on rising fundamentals

• Very low total volume overall

• Declining volume and order flow

• Declining interest in social media (crypto Youtubers seeing massive drops in views, sites like CoinTelegraph seeing massive drops in article views, Google searches dropping...etc)

https://steemit.com/bitcoin/@jnem/is-korean-crypto-returning-to-normal-the-return-of-crypto-and-the-kimchi-premium

Overview on what is going on in Korea and the process with how Koreans will now have to make bank accounts for Crypto Trading.

https://twitter.com/lightning/status/974299189076148224

Unfortunately there is a lot of amateurs posting in r/Bitcoin as if they understand futures, markets and trading, but their posts contain absurdly inaccurate information. They appear to be motivated by their fears and trying to calm themselves.

There is NO fundamental reason to panic about the futures once they are established and sophisticated market operators are fully active they are great news for Bitcoin as they will bring liquidity and probably lower volatility.

However because people are very misinformed about the importance of understanding the basis (B) or spread between spot and futures prices and it's origins and interpretation so they are more vulnerable to manipulators strategies both upwards and downwards by sophisticated futures traders attempting to use momentum ignition manipulation during the initial days and weeks the contracts go live!

http://www.theoptionsguide.com/futures-basis.aspx

Hopefully in r/BitcoinMarkets we can be more sophisticated than the 101 and some theory means posts so there is nothing to worry about people ... nonsense! If you don't understand it then you do have something to worry about! You will be manipulated into buying at highs when B >> 0 and selling at lows when B << 0 unless you know what you are looking at.

Use your brains and educate yourself so you understand what is happening. Learn about and watch all of the spreads! Futures and spot and also between exchanges. BitMEX is a futures exchange so make sure you remember that.

It would be a great service to the community if the Bitcoinity operator could add various spreads and then it will be easier for people to watch for futures driven momentum ignition and learn to avoid being gamed by the professionals, however public access to real time futures prices is not possible and probably going to make problems as people don't realize the futures prices they are seeing are stale.

Some spot and futures 101 in the context of Bitcoin futures:

• all prices at either spot or futures exchanges are driven by buyers and sellers at that exchange. Those buyers and sellers may be watching information about prices at other exchanges but they add or cancel orders on the individual exchange and that causes prices of trades and quotes to change at that exchange alone. More buyers submitting orders at higher prices than sellers submitting at lower prices means prices will increase and if the reverse is true then prices will decrease.

• spot market price S means the price to buy or sell Bitcoin immediately and Bitcoins that you can withdraw and have in your direct control in your own wallet if you like or if you sell them the fiat you can withdraw to a bank or clearing account. BitMEX is NOT a spot market it is a futures market!

• the futures price F will be different than the spot price S because it is determined by buyers and sellers on the futures exchange.

• Arbitrage opportunities between F and S can motivate professional buyers or sellers on each of the exchanges to add or cancel orders in the hope to make a profitable sequence of trades.

• The futures contract specifications profoundly effect the nature and specifics of possible arbitrage trades. If the contract requires delivery of raspberries you don't get to deliver blueberries regardless of perhaps raspberries and blueberries typically being the same price lets say, you will need to exchange them and any exchange or transaction has risks involved.

• Regarding theories, yes they are relevant to understanding and designing arbitrage transactions, but the exact specific mechanical sequence of transactions defines the viability and profitability of arbitrage trades.

Understanding Buyers and Sellers Futures Arbitrage between Futures and Spot

B = F - S

The basics of the arbitrage opportunity between spot price S and futures price F is easy to understand. Let's review that first and then we can dive into settlement and delivery specifics.

To make things simple imagine you can borrow what ever capital K you like and that is the source of all your money (this is actually how it works for primary dealer level banks).

Sellers arbitrage

At time 0 assume B >> 0, so for example F0= $20,000/coin and S0=$15,000/coin.

You sell the future at F and buy the spot as S. You do this for 1 bitcoin worth, the size of a single CBOE futures contract. Your position is 1 short futures contract and 1 bitcoin.

At time 1 the future expires and is delivered or settled. For a physically delivered future you transfer your Bitcoin you own from buying at the spot exchange to the delivery location/system of the futures exchange. If the future is physically delivered your profit is

P = F0 - S0 - C

Where C are the costs to deliver and the cost of capital. Your capital K needed for this trade is

K = S0 + max(F between time 0 and 1) x %margin rate.

Since you borrowed K you will pay interest of that loan as part of your costs. If the futures price rises above where you sold your contract you will need to borrow additional K to fund the futures margins

we will come revisit cash settled futures later

Buyers

At time 0 assume B << 0, so for example F0= $15,000/coin and S0=$20,000/coin.

Assume you have a friend who owns massive amounts of Bitcoin and expects to continue to do so and trusts you and will let you borrow just one little coin for many months for a small fee because he knows you will give it back! I'm sure all of you have a friend like that.

You borrow your friend's 1 bitcoin and sell it on spot for price S0 (the high price remember and only at the spot exchange do you see such a juicy nice high price!) at the same time you buy 1 futures contract.

At time 1 the future expires and is delivered or settled. For a physically delivered future the futures exchange turns over 1 Bitcoin which you return to your friend. If the future is physically delivered your profit is

P = S0 - F0 - C

Where C are the costs to return the Bitcoin to your friend and the cost of capital. Your capital K needed for this trade is

K = min(F between time 0 and 1) x %margin rate + ? (maybe zero because you gave the keys to your old car to your friend so he can really trust you that you will give back his bitcoin you borrowed from him to sell it)

Since you borrowed K you will pay interest of that loan as part of your costs. If the futures price falls below where you bought your contract you will need to borrow additional K to fund the futures margin.

How cash settled futures changes things

Sellers arbitrage

You can't deliver bitcoin to the exchange for delivery instead you will be paid cash USD fiat by the exchange based on an additional reference price R. Additionally in order to repay your loan for K you will need to sell that one bitcoin you own, no sorry you don't get to keep it as a souvenir on your phone for how smart you are. You sell your 1 bitcoin back on spot at time 1 for price S1.

Now your profit looks instead like this

P = F0 - S0 - R + S1 - C

only IF R==S1 then your profit is the same as in deliverable futures arbitrage

Buyers arbitrage

Very annoyingly the exchange is not going to give you a bitcoin to give back to your friend! He is gonna keep asking, he even has already gone for a drive in your car a few minutes before the futures expire, told you call me on my cell when you have my coin!

You need to go back to the spot market and buy his coin for him. The futures exchange will pay you some USD based on that reference price R. You buy your friend's replacement coin back at spot exchange for price S1

Your new profit is:

P = S0 - F0 - S1 + R - C

only IF R==S1 then your profit is the same as in deliverable futures arbitrage

So this fuss is all about R vs S1

Yes.

So why would they be different? Because everyone doing either buyers or sellers arbs really wants them to be the same because then everything works!

But we don't always get what we want!

A lot of effort will be put by professionals to implement execution systems where for their firm they expect to make their S1 that they achieve for themselves either the same or perhaps better for them than the price R. The best firms will make the most money.

But this is all clearly harder and more complex and riskier than the pure instantaneous risk free arbitrage available with physically delivered futures.

Please read this longer post of mine if you want to think and learn more about this topic:

https://www.reddit.com/r/Bitcoin/comments/7iowep/dont_let_the_tail_wag_the_dog_these_are_the/

For some discussion around how it can impact prices, please see this previous post of mine here:

https://www.reddit.com/r/BitcoinMarkets/comments/7irh9z/look_for_heavy_futures_selling_at_relative_lows/

Article URL: https://www.wsj.com/articles/nasdaq-plans-to-launch-bitcoin-futures-in-first-half-2018-1511968313

Archive (article is behind paywall) URL: https://archive.is/MReqP (new archive URL due to article being updated) https://archive.is/7o0KO

From the article:

Nasdaq Inc. and broker Cantor Fitzgerald LP are looking to join the rush on Wall Street to trade bitcoin, which powered above $11,000 on Wednesday.

Nasdaq aims to launch bitcoin futures in the first half of 2018, according to people familiar with the situation.

Separately, Cantor said it is seeking to launch bitcoin derivatives on an exchange it owns, also in the first half of next year. The moves come after two major Chicago exchange operators announced similar plans for the digital currency.

(...)

The emergence of bitcoin futures would be a big step toward maturity for the cryptocurrency, which is less than a decade old. By letting traders bet on whether bitcoin rises or falls, a futures market would make it easier for both big banks and retail investors to trade bitcoin.

Seems like the race to launch Bitcoin futures is speeding up, with more actors entering the space quite soon. Thoughts?

Here's the key takeaways so far:

• The regulatory offices have a hiring freeze right now, so budget is very constraint (suggests no need to create a department just for crypto regulation/enforcement).

• They already have a team in place, made of economists and technology specialists, which are researching crypto and already made progress on preventing scams. Suggests it's enough for now and further regulation is not necessary.

• Main issue are ICOs and scams. The chairmen said they are working together on preventing scams and have already enforced non-crypto related laws in this regard.

• Bitcoin should not be considered a security, but rather a commodity, one of the chairman even refers to the term HODL and what it stands for, says it's used primarily as a store of value. Says his 30-year old niece holds Bitcoin.

• When asked about whether there's an intrinsic value to BTC, one chairman said that while he can't understand the details, there seems to be intrinsic value linked to the underlying technology of Bitcoin, not just market demand.

• Blockchain and cryptocurrencies are linked and strict regulations on crypto could stomp tech progress.

• Crypto has an utility on a larger scale and not just for trading.

• The crypto market is very small scale and needs time to develop, to see if regulations are in fact needed.

• On educating potential investors, chairmen say the crypto community is educating itself and understand the risks (they say the community goes to libraries to research Bitcoin).

• One senator talks about the recent Coincheck hack. Chairmen replies that their authority is limited, since foreign exchanges could be used. It's a gap, but it doesn't fall under SEC/CTFC regulation.

In general, in regards to regulation, the answer is that it's inconclusive. It might be needed, but for the moment there's no threat due to the lack of maturity of the crypto market.

I took this from a member of the Facebook group "Apollo investments & ICO" https://www.facebook.com/groups/116014865776792/ Goodluck if you try to join, they are pretty selective.

I'm not even involved with WSB and its stocks, and what Wall Street and the brokers did today to retail is unforgivable. None of the shenanigans we saw today with GME, AMC, etc can happen in a truly decentralized and thus free market.

Part of the reason we are in crypto is to escape the exact kind of oppression we saw in the traditional markets today. We're not perfect yet, but with DeFi taking off we're getting there. So if you didn't have diamond hands with your Bitcoin, Ethereum and etc. before today: I hope you do now.

This exchange is no longer trustable, many people are having issues withdrawing their money, their bitcoins, some even had their accounts frozen or vanished. This cards exchange should not be in the sidebar of this subreddit anymore. I feel really bad for the current mtgox users trying to get their money out for fking months now and having customer support giving them bad excuses or simply ignoring them, so I dont think anyone new to Bitcoin should see MTgox as a viable exchange, unless they want to lose their money. Please mods, take into consideration my request, newcomers should not be put into that situtation of having their accounts frozen, their money dissapearing when using an exchange that is -still- recommended in this sub. Thanks

edit: Looks like the mods added a warning next to mtgox in the sidebar, thats good enough!

I figured I would do an update on my ongoing crypto audit. This is long.

This applies ONLY to the US.

Disclaimer:

This is MY Experience. No doubt there are others who know better. This is advice from someone who really fucked up and is paying dearly for that. Don't be ME. Crypto was new in 2017. I did a lot of poorly though out and kind of "reckless beyond sense" things with bitcoin, Etherium, ICOs and every other shitcoin available at the time.

The TL/DR is, you better have ALL of your details. Going back to your first trade. You are NOT smarter than the IRS.

-------------------

 Some quick background: 

This audit is on my 2017 taxes.  I received a request for back-up information that was due on August 26th 2019.  I went through my records and reconstructed everything I could find.  I knew i was missing some...but I did not think it would matter.  Silly me.

Of course I waited until the last minute to do the work. I had a couple other things on my mind.

It just so happened that August 26 was the day of my wife's Whipple Surgery for pancreatic cancer and it was the day my mom died after being in hospice for 3 weeks.  Literally, the worst day of my life.

Needless to say, I "effed" up the reply and that triggered a real anal probe of a review.  My review indicated I should get a 5 figure refund.  And they paid it. 

Then, they looked closer.  Boy...was I wrong.

 The amount of detail they have gone into over the past two year has been amazing.  I discovered I was using incorrect thinking about cost basis.  And when I realized that, I knew I was screwed. 

 I have been fully cooperating--which is good because they are going to be quick to play the "evasion" card.  I actually paid a big bill going into the review to acknowledge I screwed up.  They got paid back their refund...and then a lot.

 They went through every transaction on my Coinbase, Trezor, Gate.io, Bittrex, and a couple of MEW wallets. Ever. From the first day I traded bitcoin in May 2013. 

Every move, every buy, every sale.  Now, keep in mind we are talking the big run of 2017, BCH drops, ETH trades and a bunch of ICOs.  There are about 1400 transactions, but then you need to account for every move OUT of one wallet to another.  If you can tie them together, there is no impact.  But if you sent stuff out to other addresses and you cannot identify it and establish where it was...its a sale.

 So, here is how its going.  After two years and some pretty intense discussions (all of it amicable), it has come to pass that the IRS has engaged a third party vendor they use to calculate cost basis and capital gains.  This third party will take the ledger files of all of your wallets and combine them into a single transaction list.  They will calculate your cost basis and taxable income. The IRS will present this to me. Then we can "discuss."

 Now, here are some important things to note:  I had two Bitcoin Q wallets (large and small.) at the very start of my BTC life.  One I called the "large" wallet.  The other the small wallet.  One had a couple of large deposits from bulk buys and sales.  Not a big deal.  I actually had those records.  It took a week to download the blockchain...but I ended up with the detail.

The "small" wallet had hundreds of small transactions.  When I got my trezor, I moved everything to the trezor and never gave this "small" wallet any thought.  It now sits on a broken hard drive or lost USB drive.  I've torn my home apart looking for it.  That stupid little wallet is going to be the death of me. There are no coins in the wallet, but there ARE hundreds of transfers all around to and from the wallet that I cannot "prove."

Obviously, tying a sale to a specific purchase is easy. You subtract one from the other...and the difference is your gain or loss. Easy Peasy. Just make sure you can do that and account for every single move you have every made in your crypto life.

Every time I sent something out of the wallet and I cannot tie to a real sale, or an exchange for good (like a financial Report) is considered a sale. That taxable income is based on the cost basis--and these little sales will change every cost basis from 2016 to 2022.  It screws up thousands of transactions. 

Every time you get bitcoin or any other crypto coming into your account and you cannot account for the purchase, it is assumed that the income crypto is INCOME.  And that is the cost of the unit for your cost basis.

Those two things added up to tens of thousands in "capital gains" AND "income" they say haven't been reported. We've whittled away at that number....but its still bigger than I want it to be.

Throughout the process I have been asked such "rookie" questions such as, "When you move crypto from wallet to wallet in a Trezor, do you pay a commission or pay a network fee?" Scary, huh?

My point is that some of the people you will be dealing with have little or no experience with this process.  Years ago I was audited for a small business and at least the examiner and I "spoke" the same language--we might have have disagreed, but at least I understood where he was coming from--and he knew what I was saying.  No so with Crypto.  They have specialists who are always in training.  Listen to what they asking to verify that its even "correct." My examiner and I actually had some laughs over their "crypto ignorance."

Its like laughing with the Lion about to eat you.

 So...these guys are backed up against the wall.  I signed two extensions--some lasting a year because they were backed up with cases. And these are the examiners--not the folks doing to tax return back ups. 

Part of this is because they NEED to give you six months after your findings to appeal.  And you need at least a full year of "active examination" for the appeal to proceed.  They don’t have the staff and they don’t have the time to do this stuff swiftly. 

The downside to that is if they are up against the wall, they will go with their first blush—and that was really, really wrong.

 Since I know I am screwed, and I paid more of what I am going to owe...I signed.  And now this can go until Dec 2022. 

 But, my advice for everyone is to do the following:

Its not what you know, or think about what you did...its about what you can prove.

 Print out the account report for ALL of your exchanges.  All of your exchanges going back to your first transaction.  Put them in a safe place.

 Print out the history of each of your wallets.  Even if you think no one will ever find it.  They will.

 List out everything you've bought with bitcoin.  Because that purchase price is going to be a sale.  If you sent it to an address...they are going to identify that address.  When I did my report I just said I bought "gold" or financial reports with it.  The gold I have receipts for.  The financial reports...not so much.  They haven't pressed me on  that stuff because they were minor.

 The ICOs bought were a pain in the ass because a lot of them were on MetaMask and it would take a fortune to go back rebuild those.  I kept pretty good records of the follow on sales, so that won't be horrible.  But I would have loved to have the records.

 If you did any kiosk and peer to peer exchanges, they will want the details.  Names, Dates, etc.

As best you can, tie one transaction to the next in a daisy chain. They understand network fees so if you can show you sent 2 of this to a wallet, and then sent it to another wallet..they understand that. But you have to be able to tie them together and prove it. This is tough when you aggregate in an off line wallet, and then send them to a single address to sell.

If you did a lot of trading (say on Coinbase and Robinhood) it can be maddening.

 Do no lie to them.  Never use NEVER or ALWAYS when describing anything to them.

Do not ignore their letters. They don't "ask" multiple times. They will write a couple of times. Then it will come certified mail. Then they will toss a lien on your bank account and house. (THAT did not happen, but I've heard stories.)

I cannot tell you how many times I've told them, "I think that's it"...and then i found a place where I did four or five "one-off" transactions that cleared up about $6k in taxable transactions (which was good.)  But, I had to go back and say, "look what I found."  On a couple occasions they've come back and said, "What was this...we cannot find it anywhere else.  It looks like it went to ‘”Fill in the blank exchange.”  And there I am standing with my pants down.  I had no memory of making that transaction 5 years ago.

 If  you are using a third party vendor to assess transactions, make sure you include ALL of your wallets and all moves, transfers, and transactions since Day 1.  Do not assume if you are using a Trezor for some stuff, a Ledger for another, and Coinbase for other stuff that simply linking your API to Coinbase is going to be good enough. Its not. They want it all.

Even though their examination will be for a specific year...they will ask to see cost basis. In my case they cannot go back further to taxable income because the statute time has lapsed. But, the "cost basis" they come up with will affect hundreds of transactions from 2017 through 2022.

They will expect a "re-file" of transactions for those tax years. Even this year, their finding will likely impact the cost basis for some crypto traded in 2021. This means I get an extension now or I will literally have to refile in May or June.

 The tiny good news is that during this process I found residual tidbits of ETH and Bitcoin in a few small wallets.  Was amounted to $5 in 2017 is considerably more today.  So I was able to pick up a couple hundred dollars. LOL

 The process has been frustrating, maddening, and enlightening.  The examining agent and I have become "friendly."  They are wonderful people working for an entirely inept bureaucracy.  While I have gotten my digs in here and there, I guess I have been worn down to being a compliant worker bee.

You are not smarter than the IRS. If you watched Ozark and think you can move money around in the US without them seeing it or finding it...you are wrong. Don't try doing that.

Don't lie. If you are in this situation, suck it up and deal with them. Get help if you need it. DO. NOT.LIE.

 They will come at you…not this year, but in 1 to 2 years or later.  They are that backed up.  They will ask for a whole range of detail.  If you do not provide it, with cross references or updates, they will nail you.  That is where it becomes scary.

 If anyone lives in the US and they find you have done any dealing in Crypto and you do not “check the box” on the Tax form they will come down hard on you.  Don’t do that.  They told me that is the first thing they will cross reference.

So, after two years I've finally submitted every note, spreadsheet, download, or report that I can find displaying my crypto history. There are no more Merlin Cryto secrets. They have it all. Its up to their Wizards.

They will come back with a number that I can negotiate, dispute, or appeal. I am pretty sure I won't have the money or inclination to fight this further. I can pay their fine, get Jussie'd out of "IRS jail" and get on with my life. When someone in your family has PC, you do not dwell on shit. Even when its been gone for two years.

 The only thing that makes me smile is the knowledge that somewhere there are a bunch of college kids who made $50k in Dogecoin last year.  Or Shiba.  And they either blew it on Spring Break or they tried to hide it (They watch too much Ozark.). And these kids are going to have to claim that revenue on their Taxes, their parent’s taxes, and their FAFSA.  Financial Aid will get dropped.  And parents will be on the hook for their kids taxes…AND their own modest tax rate could get bumped up to another rate.  

That might be fun to watch as I emerge on the other end of the IRS colon

My best advice is be very careful.  Be honest.  And be prepared to show you work...just like a 7th grade algebra test.

If you have any questions, let me know. I will do my best to answer them. But...every case is different.

So I haven't been in the game as long as some, but despite a lot of people on here giving a million reasons why it wouldn't work, I made some very good money in 2017 running arb strategies. Volatility was my best friend; big trading swings would result in exchange price differences literally in the four figures; differences in the 5% range weren't uncommon, with 8%-10% possible. Profits were only limited by how much fiat you could get around, and even if you couldn't, deltas between alts were enough that you could just trade them opposite ways and still make money. While I'm not in a position to quit my day job, I made some great money off these strategies.

Volatility like yesterday's would have meant a gold mine for the arb folks in 2017, but no matter how crazy things got this week, the main exchanges typically stayed within a sub-1% delta, 1.5% max. 1.5% was considered lean last year! The granddaddy of them all (CEX) even tightening versus its historic spread. Alts moved in lockstep with relatively low spreads there as well, limiting pairs arb opportunities.

All this speaks to the increased attention from legit trading shops that 2017 brought. I have several buddies who work for various prop trading shops, and nearly all of them are actively trading, with big tech stacks behind them. Like any other arb, all must come to a close. Looks like we're about there.

Bloomberg is reporting that Bitfinex and Tether are getting subpoena'd: https://www.bloomberg.com/news/articles/2018-01-30/crypto-exchange-bitfinex-tether-said-to-get-subpoenaed-by-cftc

From the article:

U.S. regulators are scrutinizing one of the world’s largest cryptocurrency exchanges as questions mount over a digital token linked to its backers.

The U.S. Commodity Futures Trading Commission sent subpoenas last week to virtual-currency venue Bitfinex and Tether, a company that issues a widely traded coin and claims it’s pegged to the dollar, according to a person familiar with the matter, who asked not to be identified discussing private information. The firms share the same chief executive officer.

Tether’s coins have become a popular substitute for dollars on cryptocurrency exchanges worldwide, with about $2.3 billion of the tokens outstanding as of Tuesday. While Tether has said all of its coins are backed by U.S. dollars held in reserve, the company has yet to provide conclusive evidence of its holdings to the public or have its accounts audited. Skeptics have questioned whether the money is really there.

https://www.cnbc.com/2018/01/25/stock-trading-app-robinhood-to-roll-out-bitcoin-ethereum-trading.html

https://twitter.com/jack/status/958743238512328704