Quote: (11-01-2017 11:43 PM)bacon Wrote:
@Maciano cryptos are not commodities. And until they get used for more transactions they are not even operating as an alternative currency. Yet...
Actually, I dont think the overall market cap of cryptos is so large that it indicates the end of its bubble. But I have concerns over the new BTC futures market. It will be possible for financial entities who dont want Cryptos to be strong since it causes people to lose faith in fiat currencies to lower the price. It is well documented, although not widely known, how the futures market manipulates gold and silver prices.
But now they are introducing futures contracts to Crypto:
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The Chicago Mercantile Exchange (CME) announced a plan to launch Bitcoin futures by the end of the year. The price of Bitcoin surged to a new record in response to the announcement. It was reminiscent of the dot.com era, when a dot.com stock would jump 10% if Maria Bartiromo merely whispered the name of the company on CNBC.
Ironically, the cheers for this new contract from the Bitcoin faithful could turn out to be analogous to chickens in the barnyard cheering at the appearance of Colonel Sanders.
GATA released an article about the new Bitcoin futures contract titled “So Long Cryptos.” I’m sure that editorial stance puzzled most Bitcoin price-momentum chasers. Crypto aficionados, for now, overlook the fact that CME futures are used aggressively to push around the dollar-based Comex gold and silver futures contracts.
As GATA points out, the ability to manipulate precious metals futures contracts by the official entities motivated to suppress the price of gold is reinforced by the volume trading discounts given from the CME to Governments and Central Banks who trade on the CME.
If there any reason to assume that the same volume discounts will not be extended to the Bitcoin contract? Another curious feature of the Bitcoin contract is that it will be settled in cash. I would point out the original intent behind futures contracts was to enable producers and users to agree ahead of time on a price that would be paid for the delivery of the underlying commodity associated with the futures contract. Futures were a financing tool intended to facilitate the production and distribution of the underlying commodity product.
The Bitcoin futures contract is settled only in cash – U.S. dollars. To wit, does this not theoretically sabotage the intended purpose of Bitcoin, which is to provide an alternative to fiat currencies? Why would you want to receive fiat dollars rather than delivery of the underlying?
Technically this is not a bona fide futures contract. It’s a derivative of the “index” price of Bitcoin but it does not facilitate the production and distribution of Bitcoin. As such, it’s an instrument of pure speculation. By definition, this opens the door to manipulation by the entities who might be motivated to control the price of Bitcoin. Oh, by the way, those entities can buy and sell the contracts at a price advantage to the speculators by virtue of the volume discounts.
At least with gold and silver contracts, the contract enables the contract owner to take delivery of the actual physical commodity connected to the contract. To a limited extent, this mechanism serves to prevent the complete unfettered manipulation of gold and silver via the Comex futures contract.
With the Bitcoin futures contract, the contract owner is paid cash. The absence of a requirement to deliver actual Bitcoins enables the issuance of an unlimited number of fiat dollar-based paper Bitcoin contracts which can be used to drive the price lower by increasing the supply of the contract relative to the demand. So much for the idea that Bitcoin supply issuance is firmly capped. This could actually be quite entertaining to observe.
The reason gold and silver are manipulated by Banking entities is that they present a threat the public's faith in fiat currencies(with endless devaluation through inflation). Given the limited supply to act as a buffer to devaluation over time, doesn't Crypto also represent a similar threat to fiat?
People should pay attention to the fact that if the same mechanisms used to control gold and silver prices via future contracts are going to soon be used for Crypto, with the same Banking entities being key players in the market, then what will happen to future Crypto prices?
I'm not interested in or have time for discussions with ppl like you.
If you want to keep your gold, fine. Keep it. If you believe gold can be manipulated down for decades, fine, whatever helps you sleep at night.
I'm abt bitcoin.