Crypto Chaos - Bitcoin Price Swings Signal Futures Fiasco Ahead Of Launch

Take your pick as to what price you think Bitcoin is trading at this morning...

After an utterly shocking day yesterday with Bitcoin prices soaring towards $20,000 intraday on some exchanges, the true chaos of the cryptocurrency is unveiled ahead of Monday's futures launch.

GDAX shows bitcoin trading up to $19,697 yesterday before plunging to $13,788 and then rebounding...

GDAX is flashing $15,500, BitStamp is signaling a plunge to $14,500, and Bloomberg's aggregate price is around $15,000 - all of which are well down from yesterday's GDAX-based $19,600 record highs as all the fears of margin clerks were realized amid yesterday's chaotic run.

As Bloomberg reports, the cryptocurrency’s eye-popping rally would have triggered so-called circuit breakers on seven of the past 10 days, pausing or even halting trading to ensure an orderly session, based on rules planned by exchanges.

CME Group stipulates a two-minute trading pause if the price of the contract rises or falls 7 percent from the prior day’s settlement price. There’d be another two-minute pause if the gap widened to 13 percent. No trades can occur at prices higher than 20 percent from the settlement.

Thursday would’ve been wild. The 7 percent threshold hit less than two hours after the session started. A few hours later 13 percent fell. Around 10:15 a.m., the 20 percent cap was hit and held for about an hour. And the price popped above that level at least six other times over the rest of the day.

Cboe Global Markets has its own rules, halting trading for two minutes if prices rise or fall 10 percent, and for five minutes at 20 percent. Cboe futures are set to start Sunday, while CME targets Dec. 18.

Here is what the chaotic trading would have looked like in the last two days...

 

One thing of note is that as Bitcoin slides today, Ethereum is bid (up 6% vs Bitcoin's 3% decline)...

While yesterday saw Mike Novogratz confirming: "This feels like what a speculative top feels like..."

“The only reason I’m not sure -- and it might be the top for a short period of time -- is that it’s a big world, and the market cap isn’t nearly big enough for it to be the top of the whole system."

CoinTelegraph reports, Stefan Ingves, governor of Sweden's Riksbank and the chairman of global regulators at the Basel Committee, has warned investors that the risk may be huge. According to the regulator, investing in Bitcoin is a dangerous endeavor.

The banking regulator stressed that investment in things that rise wildly is generally not a good idea, given the nature of investment generally. He said that the future of cryptocurrencies and the traditional banking world are not particularly linked, and made it clear that legacy banking was not a thing of the past. He said:

"Let me also stress that sometimes there is a bit of a hype when people talk about fintech, thinking that old-fashioned banking is going to go away. But I don't think that is going to happen because regardless of the technology available, in most countries we have had banks for hundreds and hundreds of years and most likely it is going to continue that way.”

Still, we leave you with Novogratz' perspective

"Bubbles don’t end until the buyers are all in, until there’s leverage and there’s no leverage in this system yet..."

 

“I think that’s what you wait for."

Still, he’d like to see some of the volatility of trading bitcoin dissipate.

“I hope it calms down a bit just to give people a chance to breathe," he said.

 

“Market participants can’t keep up with the frenetic pace."

However, Mark Yusko notes "you are here"...

Comments

Laowei Gweilo MagicHandPuppet Fri, 12/08/2017 - 08:49 Permalink

>>> '“The only reason I’m not sure -- and it might be the top for a short period of time -- is that it’s a big world, and the market cap isn’t nearly big enough for it to be the top of the whole system."' <<<Here's the problem IMO with this statement, or the statement by other sources that attempt to say Bitcoin represents future crypto value, future crypto financing, etc.Why would any of those 'systems' ever use Bitcoin in particular? Cryptos have huge value but the cypto used is arbitrary. You can move money from X to Z with any crypto. You can finance or raise capital with any crypto. You can use any crypto, assuming stability, as a presevation of wealth.Bitcoin could serve basically every possible one of these regardless of price, meaning that basically it's entire value is not based on its practical use but it's speculative use.And in fact, it's speculative use and market cap are counterproductive to each of the other practical uses.So I think what Bitcoin actually may become, unless it becomes redundant, is basically the anti-crypto -- the hedge, the barbarous 'crypto' relic.  Perhaps exactly like the Colonial war-time American concerny, that helps build the crypto future -- preciseuly becuse of its speculative nature enriches the system with capital growth.Then, as financing and capital movement and money transfers and everything move into far more efficient and stable cryptos, Bitcoin is deloved into essentially the 'gold' of crytpos (distinct and not analogous to real gold; just the unbacked unpegged crypto equivelent), the save haven money pours into when the others have risk, and moves out of when everything else appears more practical. Cuz it's can't be speculative or a hedge, and also practical in-all-the-ways-cryptos-are-practical at the same time. 

In reply to by MagicHandPuppet

Thought Processor Laowei Gweilo Fri, 12/08/2017 - 08:53 Permalink

  We should take some bets on how long it will take for the Bitcoin futures tail to start wagging the bitcoin dog. I think that within two months it'll will have enough contract volume to displace the Bitcoin volume.  Maybe sooner.  I would imagine all the professional traders out there are chomping at the bit to jump into this action.  And the machines, don't forget the machines.

In reply to by Laowei Gweilo

richdemetri YUNOSELL Fri, 12/08/2017 - 10:02 Permalink

Despite the widespread media attention and huge price runup, there is only 7.1 million people with more than $100 in their own wallets. https://bitinfocharts.com/top-100-richest-bitcoin-addresses.htmlEther has only 16 million wallets in total https://etherscan.io/chart/addressSo it's probably not a top yet, considering how large the world is, and how easy it is to create a wallet. I would say a top will occur when the number of new wallets created each day platues.

In reply to by YUNOSELL

shamus001 IH8OBAMA Fri, 12/08/2017 - 12:35 Permalink

Without the futures, o e could simply HOLD and fare well. The speculatirs buy and sell, surging the price in both directions, all the while the "holders" sliwly see the value of their btc increase. HOWEVER the futures will NOT require anyone SELLING to actually BUY btc, so in practice, the banks will print and short DRIVING the movement down, while profiting the entire way. In effect, btc wilk be beat down from the outsude, just like gild without EVER ownung a single bitcoin! FUTURES is a way fir FIAT to CONTROL the financial system.

In reply to by IH8OBAMA

Laowei Gweilo Thought Processor Fri, 12/08/2017 - 09:11 Permalink

That's the thing with an 'asset' that is so inheritently speculative. Typically spot price is going to influence future price of an asset you can take delivery on. But BTC futures are purely cash settled, and BTC only serves a speculative role currently. If more speculative volume moves into futures than BTC itself, you could see its daily spot prices converging more to what futures are being traded at rather than futures converging on spot price. If the volume moves into futures -- which it could if most of the volume is speculative and has no inherirent reason to be in a crypto per se other than to 'get rich of cyrptos -- that the lower volume BTC could look at higher future volume for guidance. Negative future action could easily cause additional negative sentiment in the spot price that would not exist without a futures market.

In reply to by Thought Processor

OpenThePodBayDoorHAL Laowei Gweilo Fri, 12/08/2017 - 14:07 Permalink

Someone has their thinking cap on. With BTC futures you don't even need to pretend to have any ownership of BTC: they're cash-settled. So ask yourself, which is there more of, BTC or USD?Answer: now that Wall St has their foothold, they can do to BTC what they do on a weekly basis to gold, where the futures drive the price of the underlying. Now ask, what do the Big Dogs want BTC to trade at? How many plebes do the Big Dogs want to get into crypto? And once they're all in? LOL

In reply to by Laowei Gweilo

Laowei Gweilo rrrr Fri, 12/08/2017 - 10:07 Permalink

For sure, but then what it is going to be? Storage of wealth? A network for money transfers, raising capital, payments?There's no good argument for BTC being any of those instead of new superior cryptos...So, valuing BTC on the presumption it will become (and stabilize) at the 'market cap' of any of those functions, presumes  there's no reason why people would switch to superior cryptos.If cryptos are like the internet, there's a good argument that BTC is essentially an AOL or Nortel.It may very well go much higher from today as it helps build cryptos.But I'd need a pretty good argument to believe why anyone would still be using BTC in 10 years as a storage of wealth or as system of money function opposed to numerous superior cryptos that exist now, and future cryptos that may even be better.I think far too many people are valuing BTC based on crypto value rather than just the fact it's 1 of many [companies] that may survive or die. It has no inherirent reason why it's superior than any other which warrants that judgement.

In reply to by rrrr

opport.knocks rrrr Fri, 12/08/2017 - 10:23 Permalink

"Its going to be"... replaced by a global cryptocurrency that is faster, has lower transaction/conversion costs, scalable and (ahem) probably regulated. Bitcoin is a good beta product, but its limitations and serious flaws as a medium of exchange cannot be made to go away by tinkering with the code. It needs to be rebuilt from the bottom up, so it will be replaced.Bitcoin is nothing more than the current dominant "brand" name. The current "investors" are just engaging in FOMO. 

In reply to by rrrr

BarkingCat Laowei Gweilo Fri, 12/08/2017 - 10:01 Permalink

If you are concerned about wealth preservation then no crypto will ever serve that purpose just as no fiat can serve that purpose.When you want wealth preservation, you have to buy real and tangible things. This means something like the S&P ETF and/or NASDAQ ETF or land that can produce enough income to offset property taxes.  Cryptos? Right now, they are purely speculative instruments. 

In reply to by Laowei Gweilo

Thought Processor mily Fri, 12/08/2017 - 09:07 Permalink

  Rock and Roll motherfucker.  Bitcoin plebes won't know what hit em.  This reminds me of how just before the 2008 crash all the levereged instraments were put into place to take advantage of the forthcoming volatility (and shorting rules were relaxed also, just a coincidence I'm sure).  Almost like they knew.............

In reply to by mily

Honest Sam bcking Fri, 12/08/2017 - 08:52 Permalink

It's not necessary to make predictions one way or the other due to the "unknown unkowns" operating at the stratospheric levels none of us are privy to.Enjoy you gains but projecting mass adoption is in action is going to fraught with dragons, every step of the way till the 1% sense that their treasures are in real jeopardy. Then is  won't take but a press of the numerical keypad on the Central Banks' I phone to end the Crypto thing once and for all. That's not a prediction just a counter move that is very real and proven in 2008-2009. Only took 24 hours to send all the massive shorts into poverty, drinking out of discarded wine boxes, then living under cardboard boxes in Compton.

In reply to by bcking

bcking Honest Sam Fri, 12/08/2017 - 09:00 Permalink

To those of us "full in" since the early days this isn't a surprise, but you can keep your head in the sand. I repeat, non of us early adopters are surprised by this move and this is just the beginning. It's kinda like comparing a 2017 Corvette to a horse and buggy. You choose the buggy, I choose the Corvette. There's really no comparison unless you prefer the inefficiencies and smells of the horse.

In reply to by Honest Sam

itsaugood Mustafa Kemal Fri, 12/08/2017 - 10:43 Permalink

That is like saying that the accounting software that a business uses to keep track of its money has more value than the actual money itself. Or like saying that your receipt from a transaction is more valuable than the money used in the transaction. Real money, and its value, does not need to rely on the fact that its use history may, or may not, be recorded in a ledger somewhere. 

In reply to by Mustafa Kemal

Citxmech itsaugood Fri, 12/08/2017 - 13:19 Permalink

Crypto will have "real" value when I can trade my /productsservices for them directly, and then buy others' products and services directly, without ever having to resort to banker-derived debt-based fiat.  We're a ways from that happening, but the potential is obviously value enough for many.  My guess is that movement in this market will follow Grisham's law.  The harder .gov squeezes in terms of taxation, the more folks/small/medium industry will be pushed toward crypto.  

In reply to by itsaugood

Mister Ponzi itsaugood Fri, 12/08/2017 - 15:46 Permalink

So, again. Cryptocurrencies are based on a distributed ledger. We know that decentralized databases are worse than centralized ones in almost all respects (performance, cost etc.) except one: Due to the decentralized nature there is no single point of failure which enables trustless transactions. The main innovation here is the possibility to cut out the middlemen due to the immutability of entries in the distributed ledger.If you backed cryptos by anything you would reintroduce counterparty risk. Being backed by something means being exchangeable for something. However, this collateral has to be stored centrally at one or several locations which means you have to trust somebody again: Is the Collateral there? Is enough collateral there? Is the collateral pure or is there some fake? A decentralized and at the same time collateralized cryptocurrency doesn't make sense.

In reply to by itsaugood