Bitcoin

Ron Resnick · Dec 7, 2017

Out of all of the public-traded blockchain-related companies I could find these three seem to be at least vaguely legitimate:

BTL Group (BTL on the Toronto Stock Exchange) created a blockchain platform called Interbit. (I have no idea what that means.)

DigitalX (DCC on the Australian Stock Exchange) seems to advise on initial coin offerings.

Global Blockchain Technologies Corp. (BLOC on the Toronto Stock Exchange) seems to be a new investment fund the seemingly impressive managers of which took over a pre-existing and unrelated listed company. (It is sometimes easier and cheaper to buy a listed but comatose company than to register and list a new company from scratch.)

Folsom already has kindly given me his take on these three companies. (Folsom please feel free to post about these companies here if you wish.)

Does anyone know anything about these companies?

Pb Blimp · Dec 7, 2017

Ron Resnick said:
I hope CBOE will list options contracts. But will they list 1/10th contracts? It would be very interesting to see put premium versus call premium!

I tried to short GBTC when it was at something like an 80% premium to NAV, but I could not get any borrow.

I do not know if there is any stock borrow available but the two or three companies whose stock prices rose a few hundred percent simply because they changed their names to include the word "blockchain" would seem to be good shorting candidates.

I wanted to be short ahead the CBOE activity so I just grabbed a bunch of the Deribit Puts.

Ron Resnick · Dec 7, 2017

I am not planning to sell any before the event, but I think that's a totally rational bet.

NorthStar · Dec 8, 2017

• https://www.cnbc.com/2017/12/08/bitcoin-price-wild-swing-after-new-record.html

NorthStar · Dec 8, 2017

? 'Tulip Mania', what is it and what does it have to do with it?
• http://money.cnn.com/2017/12/08/investing/bitcoin-tulip-mania-bubbles-burst/index.html

Flowers, gold, diamonds, ...aged tangible assets; we can wear, decorate with, impregnate our jewelry with...wrist watches, necklaces, earings, etc. ...Swiss movements with rubies and sapphires, crowns sparkled with emeralds and avocados.

The name 'Bitcoin' is funny; a bit is from a digital measure, and a coin is from a digital coiner/hacker.

Mining tulips is planting seeds and harvesting the crops during the season.
Mining gold is axing a pick on a rock and sorting the colors.
Mining diamonds is digging and watering and sweating and everything.
Mining bitcoins is processing chips faster and wasting heat that could be used to warm up people living in the cold. It would be best mining in cold countries, not coal countries.

NorthStar · Dec 8, 2017

There is an expression; his grandfather was a gold digger, she's a gold digger, he inherited his fortune from his gold digging ancestors, they are super rich from the underground black gold...oil.

For every fever burning in the soul of a man there are hundreds of hands reaching for the sky.
___

• https://bitcoinist.com/bitcoin-futures-upward-price-pressure/

Ron Resnick · Dec 9, 2017

Litecoin is up 73% today.

NorthStar · Dec 9, 2017

In one day only!

I have no clue what next week will bring, but it sure is exciting living today.
Always new stuff coming up, ...joy, and tears.

Steve Williams · Dec 9, 2017

I guess all of us sitting the sidelines are enjoying watching all of you players in the game. This reminds me of the Dotcom boom when every stock was going off the roof. I was one of those that played that game as they continued to rise every day by large amounts. Everyone was speculating if and when the bubble would break. I remember that every weekend I listened to Bob Brinker on the radio who implored everyone to get out with what they had. Everyone scoffed him including me as we wondered what does he know. I woke upon day to find it either all gone or worth pennies on the dollar. I won't ever make that mistake again so I guess we are living vicariously through all you players

marty · Dec 9, 2017

Ron Resnick said:
Litecoin is up 73% today.

My anal sphincter just tightened up 73% accordingly.

bonzo75 · Dec 9, 2017

https://www.theonion.com/bitcoin-pl...tm_source=Facebook&utm_medium=SocialMarketing

Ron Resnick · Dec 9, 2017

This is the biggest bubble, I guess, in all of financial asset history?

The commencement of futures trading (Sunday for CBOE futures and Monday for CME futures) certainly will be fascinating for people interested in this asset. I would assume (and this probably is the conventional view) that this first opportunity to short Bitcoin would crash the price by allowing for the first time a bearish side for the asset to develop, and create a much more balanced price. But who knows?

It will be fascinating to see how liquid the futures market is, and what the spreads are.

It will be fascinating to see how quickly the notional futures (the open interest) value exceeds the cash market value of bitcoin.

If the futures crash the cash price maybe individuals who have watched the meteoric rise from the sidelines will see their opportunity to buy Bitcoin thousands of dollars below Friday's price?

Will the late-dated futures contracts be in contango (long-dated futures price higher than front-month futures price) or in backwardation (long-dated futures price lower than front-month futures price)?

Will institutional investors with zero exposure currently buy futures just to have some upside exposure? No one knows.

This is kind of the financial equivalent of a once-in-a-lifetime astronomical event.

The only people who I am sure will be doing the right thing are the traders set up to arbitrage the futures and cash markets! Remember that there are no laws prohibiting market manipulation here!

I wish the CFTC would require the CBOE and CME to follow Thomas Petterfy's suggestion to "firewall" exchange margin equity dedicated to Bitcoin trading from exchange margin equity dedicated to all other products, but that apparently is too sensible an idea.

Steve Williams · Dec 9, 2017

Ron

I still find it personally difficult to call any of this “assets”

Ron Resnick · Dec 9, 2017

Steve Williams said:
Ron

I still find it personally difficult to call any of this “assets”

A currency it is not, but an asset it surely is.

Steve Williams · Dec 9, 2017

I’m rooting for you Ron. Not an asset for me

DaveC · Dec 9, 2017

Well, I hope everyone gets rich so they can buy more (of my) audio equipment!

Ron Resnick · Dec 9, 2017

Steve Williams said:
I’m rooting for you Ron. Not an asset for me

Thank you very much Steve!

My interest is mainly curiosity. We bought a little bit only because I have found I am much more interested in following something if I own a bit of it or a few shares of stock.

NorthStar · Dec 9, 2017

• http://www.bbc.com/news/business-42281004

Pb Blimp · Dec 9, 2017

Ron Resnick said:
This is the biggest bubble, I guess, in all of financial asset history?

The commencement of futures trading (Sunday for CBOE futures and Monday for CME futures) certainly will be fascinating for people interested in this asset. I would assume (and this probably is the conventional view) that this first opportunity to short Bitcoin would crash the price by allowing for the first time a bearish side for the asset to develop, and create a much more balanced price. But who knows?

It will be fascinating to see how liquid the futures market is, and what the spreads are.

It will be fascinating to see how quickly the notional futures (the open interest) value exceeds the cash market value of bitcoin.

If the futures crash the cash price maybe individuals who have watched the meteoric rise from the sidelines will see their opportunity to buy Bitcoin thousands of dollars below Friday's price?

Will the late-dated futures contracts be in contango (long-dated futures price higher than front-month futures price) or in backwardation (long-dated futures price lower than front-month futures price)?

Will institutional investors with zero exposure currently buy futures just to have some upside exposure? No one knows.

This is kind of the financial equivalent of a once-in-a-lifetime astronomical event.

The only people who I am sure will be doing the right thing are the traders set up to arbitrage the futures and cash markets! Remember that there are no laws prohibiting market manipulation here!

I wish the CFTC would require the CBOE and CME to follow Thomas Petterfy's suggestion to "firewall" exchange margin equity dedicated to Bitcoin trading from exchange margin equity dedicated to all other products, but that apparently is too sensible an idea.

First Bold-That's why I wasn't willing to wait for Sunday to get short even though Deribit is packed full of exchange risk.

Second Bold-The next few days will indeed be absolutely fascinating. Gotta git me some backwardation.

Third Bold-Agree completely. We have never lived in a world where pork belly's or grain supplies could literally just disappear. Commodity prices can be highly volatile but commodities are always deliverable to fulfill contracts. This thing is just weird and in addition to price volatility the inherent "bitcoin exchange" risk that will now be born by the CBOE and the CME precipitates a frightening contagion potential IMO.

Barry · Dec 10, 2017

I love you guys. One of you is long; the other is short. The one who's short is afraid of market contagion that'll imperil other markets (in which presumably he's invested). Neither of you has any idea what the price action will be. I realize you're just having fun of course, it just doesn't make sense to me.

I can't imagine how the CBOE and CME are going to add much liquidity to this market initially. It's too expensive to backstop their positions. The bid ask spread will surely be enormous. Taken together with other market risks for this stuff, all this suggests there'll be more than a few bumps in the road.

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