Post: #1

According to a recent Bloomberg article, the massive pressure for short selling may come from hedge funds wanting to take advantage of what they see as the greatest shorting opportunity in history.

https://cointelegraph.com/news/hedge-fun...st-bitcoin

Could someone explain how exactly would this play out, in plain English?

'baller

Post: #2

Exaggerating for effect, but this should give you the general idea:

I'm goldman sachs.

I take out a short for BTC for a trillion dollars. A short means I sell it now and buy it later, as opposed to a normal purchase where I buy now and sell it later. So with a short, I make money if the price goes DOWN, not up.

I call up my buddies at the federal gov't and have coinbase, bittrex, and kraken shut down and their execs all arrested for violating securities laws.

The price of BTC goes down a lot due to panic. It goes from 10k to 1k.

I close my short.

I pocket 900 billion dollars.

Post: #3

(12-05-2017 10:39 AM)SamuelBRoberts Wrote:  Exaggerating for effect, but this should give you the general idea:

I'm goldman sachs.

I take out a short for BTC for a trillion dollars. A short means I sell it now and buy it later, as opposed to a normal purchase where I buy now and sell it later. So with a short, I make money if the price goes DOWN, not up.

I call up my buddies at the federal gov't and have coinbase, bittrex, and kraken shut down and their execs all arrested for violating securities laws.

The price of BTC goes down a lot due to panic. It goes from 10k to 1k.

I close my short.

I pocket 900 billion dollars.

Yikes! Thank you, SamuelBRoberts.

'baller

Post: #4

There will be a huge psychological effect.

News coming out like this - you've got to take it with a pinch of salt in my opinion.

From what I know, if these big banks are offering futures contracts, they will need to buy (if they haven't already) a shit load of Bitcoin to be able to offer it to their clients - which in the short term at least should drive price up. How long does the short term look? It would probably be a couple of years.

When people start saying it's a great opportunity for the big banks to short it - then will that result in a lot of people adopting short positions and actually, the big banks putting in long positions to catch them all out? Who knows. But I don't take news like this at face value.

With all this money coming in, it won't come in at once. I know Samuel is exaggerating above, but from my understanding if someone wants to short for a trillion dollars, there needs to be a trillion dollars on the other side for them to sell in the first place. And if a bank were to drop a trillion dollars in, it would need to be staggered.

I have a theory that Bitcoin will be pumped and pumped until 1 BTC is only in reach for big banks and the extremely wealthy. The average citizen won't be able to invest much meaningful money into BTC unless they get in over the next few months/year or so. The price will eventually stabilise at something ridiculous, either in the hundreds of thousands or at least a million. Banks will adopt it as another investment vehicle and for the average citizen, anyone investing in it for the first time will only see themselves getting similar gains to what you can get at a bank in the present. Essentially, this makes Bitcoin only valuable for those who have got in early, or are rich - and the rich tend to look out for themselves only. At such a price, Bitcoin wouldn't get mass adoption or effective use because it would cost way too much money to get a decent portion of it - and this eliminates (in my opinion, a quite feeble) threat of replacing fiat currency, but keeps it around where the elite can still profit from it.

I see it that yes, shorting it and "killing" Bitcoin or consumer confidence in it is a scenario which can happen, but I think there will be a bit of an uproar if that were to happen. Market manipulation in itself isn't illegal, but there are grey areas from my understanding. For example, a huge pump and dump, or vice versa, requires a bank to get affiliates, investors and so on to release a lot of money into free trading as an upfront payment for "services". Essentially, they are duping people into releasing money so that they can tank or pump the market price. This is illegal, but also doubtful if a bank did do it, that they'd get more than a slap on the wrist. Who knows?

A far "easier" way for these big banks to get some sort of control on Bitcoin, in my opinion of course, is for them to push it way out of the average person's reach. The Bank of England believe Bitcoin is a commodity and not a currency, although the fact that it has some sort of use adds to the value. Sure, they can short it and make a killing, but there's much more money to be made by driving the price up, especially in something with a limited supply.

I of course could be chatting a load of shit, but there we go.

Post: #5

(12-05-2017 12:57 PM)Matt3B Wrote:  There will be a huge psychological effect.

News coming out like this - you've got to take it with a pinch of salt in my opinion.

From what I know, if these big banks are offering futures contracts, they will need to buy (if they haven't already) a shit load of Bitcoin to be able to offer it to their clients - which in the short term at least should drive price up. How long does the short term look? It would probably be a couple of years.

When people start saying it's a great opportunity for the big banks to short it - then will that result in a lot of people adopting short positions and actually, the big banks putting in long positions to catch them all out? Who knows. But I don't take news like this at face value.

With all this money coming in, it won't come in at once. I know Samuel is exaggerating above, but from my understanding if someone wants to short for a trillion dollars, there needs to be a trillion dollars on the other side for them to sell in the first place. And if a bank were to drop a trillion dollars in, it would need to be staggered.

I have a theory that Bitcoin will be pumped and pumped until 1 BTC is only in reach for big banks and the extremely wealthy. The average citizen won't be able to invest much meaningful money into BTC unless they get in over the next few months/year or so. The price will eventually stabilise at something ridiculous, either in the hundreds of thousands or at least a million. Banks will adopt it as another investment vehicle and for the average citizen, anyone investing in it for the first time will only see themselves getting similar gains to what you can get at a bank in the present. Essentially, this makes Bitcoin only valuable for those who have got in early, or are rich - and the rich tend to look out for themselves only. At such a price, Bitcoin wouldn't get mass adoption or effective use because it would cost way too much money to get a decent portion of it - and this eliminates (in my opinion, a quite feeble) threat of replacing fiat currency, but keeps it around where the elite can still profit from it.

I see it that yes, shorting it and "killing" Bitcoin or consumer confidence in it is a scenario which can happen, but I think there will be a bit of an uproar if that were to happen. Market manipulation in itself isn't illegal, but there are grey areas from my understanding. For example, a huge pump and dump, or vice versa, requires a bank to get affiliates, investors and so on to release a lot of money into free trading as an upfront payment for "services". Essentially, they are duping people into releasing money so that they can tank or pump the market price. This is illegal, but also doubtful if a bank did do it, that they'd get more than a slap on the wrist. Who knows?

A far "easier" way for these big banks to get some sort of control on Bitcoin, in my opinion of course, is for them to push it way out of the average person's reach. The Bank of England believe Bitcoin is a commodity and not a currency, although the fact that it has some sort of use adds to the value. Sure, they can short it and make a killing, but there's much more money to be made by driving the price up, especially in something with a limited supply.

I of course could be chatting a load of shit, but there we go.

You don't need to own a sizeable share of the USD in circulation. T still be able to use pennies and dollars to buy things. Same will apply to blockchains. Adoption of blockchain (as a technology in general) will have far less to do with how much the banks owe and more with the benefit-cost analysis of blockchain technologies: i.e. if it makes things cheaper, more convenient or easier to use it'll get adopted.

As for investing, you don't need to have money to be able to buy 1BTC. You can buy far smaller increments. As such, even if the value of 1 BTC gets pumped to $1million, you can still invest $1000 and join the ride up.

The code for blockchain technology is open-source. So even if say somehow banks take control of Bitcoin and somehow make it inaccessible to the average person, people can just make a new chain and run stuff on it.

I do find that the internet can be a good analogy. For example, just because a few major players dominate the internet (FB, Google, Amazon) does not mean the average person is locked out. Similarly, those who controlled the flow of information had a really hard time stopping the progress of the internet. I'm sure Encyclopedia Britannica did its best to damage Wikipedia, but it was a failed attempt in the end.

The entire reason Bitcoin even got started was to get away from a centralized banking system. Those people still exist, if Bitcoin does get centralized, they'll just move somewhere else. Look at Zimbabwe, they outlawed Bitcoin, didn't stop Bitcoin from getting used though. I don't think banks will be able to stop this or control it to the same extent they've controlled the financial system.

Post: #6

(12-05-2017 10:39 AM)SamuelBRoberts Wrote:  Exaggerating for effect, but this should give you the general idea:

I'm goldman sachs.

I take out a short for BTC for a trillion dollars. A short means I sell it now and buy it later, as opposed to a normal purchase where I buy now and sell it later. So with a short, I make money if the price goes DOWN, not up.

I call up my buddies at the federal gov't and have coinbase, bittrex, and kraken shut down and their execs all arrested for violating securities laws.

The price of BTC goes down a lot due to panic. It goes from 10k to 1k.

I close my short.

I pocket 900 billion dollars.

While I'm sure that there will be a big short of BTC at some point, I'm not in agreement that it's nearly as easy as saying "shut it down."

Bitcoin will be bought and sold and big banks will go both long and short on it just like they do with any other security in existence.

Post: #7

(12-05-2017 10:39 AM)SamuelBRoberts Wrote:  Exaggerating for effect, but this should give you the general idea:

I'm goldman sachs.

I take out a short for BTC for a trillion dollars. A short means I sell it now and buy it later, as opposed to a normal purchase where I buy now and sell it later. So with a short, I make money if the price goes DOWN, not up.

I call up my buddies at the federal gov't and have coinbase, bittrex, and kraken shut down and their execs all arrested for violating securities laws.

The price of BTC goes down a lot due to panic. It goes from 10k to 1k.

I close my short.

I pocket 900 billion dollars.

Less extreme version is that a couple of BTC whales (big bag holders) cooperate. They all short, and then start dumping their bags at the same time. People panick and price falls. They make money through their short, and buy back their BTC at a cheaper price.
-> repeat cycle

It's a big power play though. If there's a buy wall popping up and the market eats their sell orders, they lose money on the short and have to re-buy BTC at a higher price...

These practices are probably illegal to do with equities, so there's some legal risk as well (regulation will come quick now big institutions are stepping in, they won't like to get played like this and they can fire back).

Post: #8

Some misinformation here, you don't need to purchase an asset to hold a contract in it (or write one). A future is a derivative in the future price of an underlying, be it a month, year, or years in advance. The adoption of a futures market will allow for hedging risk in the crypto world, by for example, holding bitcoin while shorting a future in it, to negate any future price action risk. It's far more likely that banks will be using these futures to hedge portfolio risk in their crypto holdings. Prepare for a far less volatile future on the underlying asset. Instead of major 10% swings, you'll be looking at something more akin to the energies markets, or commodities.

I've been waiting for these and options before getting into the sector. It's good news.

Post: #9

Dupe

Post: #10

Less extreme version is that a couple of BTC whales (big bag holders) cooperate. They all short, and then start dumping their bags at the same time. People panick and price falls. They make money through their short, and buy back their BTC at a cheaper price.
-> repeat cycle

It's a big power play though. If there's a buy wall popping up and the market eats their sell orders, they lose money on the short and have to re-buy BTC at a higher price...

These practices are probably illegal to do with equities, so there's some legal risk as well (regulation will come quick now big institutions are stepping in, they won't like to get played like this and they can fire back).
[/quote]

Essentially, like the ethereum microcrash this Summer, right?

'baller

Post: #11

(12-05-2017 10:39 AM)SamuelBRoberts Wrote:  Exaggerating for effect, but this should give you the general idea:

I'm goldman sachs.

I take out a short for BTC for a trillion dollars. A short means I sell it now and buy it later, as opposed to a normal purchase where I buy now and sell it later. So with a short, I make money if the price goes DOWN, not up.

I call up my buddies at the federal gov't and have coinbase, bittrex, and kraken shut down and their execs all arrested for violating securities laws.

The price of BTC goes down a lot due to panic. It goes from 10k to 1k.

I close my short.

I pocket 900 billion dollars.

What's the timeframe on this in your estimation? There are major events on the 10th and 17th of this month, for example.

A mystery whale on biz said to sell on the 16th. I trust him.

Post: #12

What are these major events? More forks?

Post: #13

(12-05-2017 10:39 AM)SamuelBRoberts Wrote:  Exaggerating for effect, but this should give you the general idea:

I'm goldman sachs.

I take out a short for BTC for a trillion dollars. A short means I sell it now and buy it later, as opposed to a normal purchase where I buy now and sell it later. So with a short, I make money if the price goes DOWN, not up.

I call up my buddies at the federal gov't and have coinbase, bittrex, and kraken shut down and their execs all arrested for violating securities laws.

The price of BTC goes down a lot due to panic. It goes from 10k to 1k.

I close my short.

I pocket 900 billion dollars.

More tinfoil hatting:

Bitcoin was/is a secret ploy to soak up massive amounts of wealth from the world which has been awash in QE investment dollars.

The/A government secretly takes a load of bitcoins from the largest exchanges, drives up the price, people exchange cash for bitcoin, exchanges are all closed, and the government soaks up massive amounts of wealth without having to use T-bills.

Post: #14

(12-07-2017 12:04 AM)The Beast1 Wrote:  

(12-05-2017 10:39 AM)SamuelBRoberts Wrote:  Exaggerating for effect, but this should give you the general idea:

I'm goldman sachs.

I take out a short for BTC for a trillion dollars. A short means I sell it now and buy it later, as opposed to a normal purchase where I buy now and sell it later. So with a short, I make money if the price goes DOWN, not up.

I call up my buddies at the federal gov't and have coinbase, bittrex, and kraken shut down and their execs all arrested for violating securities laws.

The price of BTC goes down a lot due to panic. It goes from 10k to 1k.

I close my short.

I pocket 900 billion dollars.

More tinfoil hatting:

Bitcoin was/is a secret ploy to soak up massive amounts of wealth from the world which has been awash in QE investment dollars.

The/A government secretly takes a load of bitcoins from the largest exchanges, drives up the price, people exchange cash for bitcoin, exchanges are all closed, and the government soaks up massive amounts of wealth without having to use T-bills.

Interesting theory no doubt. Although I think you need to account for the actual amount of USD invested into cryptocurrencies. I'll just use BTC as an example: right now the market cap is $250billion dollars.

But the actual amount of USD actually used to buy BTC is a lot less (you don't need to put in a billion dollar to move market cap up by a billion).

Let's be super optimistic and say people invested $125 billion for BTC market cap to get to $250 bn. Considering US national government debt is about $13 trillion dollars, seems like a lot of effort just to cover 1% of the national debt, no?

Post: #15

(12-07-2017 01:00 AM)Genghis Khan Wrote:  

(12-07-2017 12:04 AM)The Beast1 Wrote:  

(12-05-2017 10:39 AM)SamuelBRoberts Wrote:  Exaggerating for effect, but this should give you the general idea:

I'm goldman sachs.

I take out a short for BTC for a trillion dollars. A short means I sell it now and buy it later, as opposed to a normal purchase where I buy now and sell it later. So with a short, I make money if the price goes DOWN, not up.

I call up my buddies at the federal gov't and have coinbase, bittrex, and kraken shut down and their execs all arrested for violating securities laws.

The price of BTC goes down a lot due to panic. It goes from 10k to 1k.

I close my short.

I pocket 900 billion dollars.

More tinfoil hatting:

Bitcoin was/is a secret ploy to soak up massive amounts of wealth from the world which has been awash in QE investment dollars.

The/A government secretly takes a load of bitcoins from the largest exchanges, drives up the price, people exchange cash for bitcoin, exchanges are all closed, and the government soaks up massive amounts of wealth without having to use T-bills.

Interesting theory no doubt. Although I think you need to account for the actual amount of USD invested into cryptocurrencies. I'll just use BTC as an example: right now the market cap is $250billion dollars.

But the actual amount of USD actually used to buy BTC is a lot less (you don't need to put in a billion dollar to move market cap up by a billion).

Let's be super optimistic and say people invested $125 billion for BTC market cap to get to $250 bn. Considering US national government debt is about $13 trillion dollars, seems like a lot of effort just to cover 1% of the national debt, no?

Who really knows, this is all uncharted territory. I made some cash on the rise a long time ago and went on to focus on other things. The rising price is just astronomical and unlike any bubble I've seen in my lifetime.

The worrisome thing that gets me, if the price collapses what type of knock on effect will there be to on other assets? I've heard of people taking 2nd mortgages out for bitcoin and leveraging up.

A big drop could expose some vulnerabilities in say China where people may have to liquidate other assets to make up for a BTC drop. This has a whole black Swan/contagion effect that regulators are foolishly not looking at.