Author Topic: bitUSD price  (Read 15182 times)

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Offline Empirical1

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The premium for shorting below the peg will be proportional to the interest rate paid for going long....  the farther from the peg, the higher the effective interest rate.

Yes this is kind of my understanding. I was just worried BTSX bulls would be willing to pay such a high interest rate to short right now it could move the price too far away from the peg but hopefully it will be fine.

Offline vegolino

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If any motherfucker dares to short at $0.7 I will eat his collateral like a mama bear eats baby bear hunters

This reminds me of opening scene in  Pulp Fiction, very funny  :)
https://www.youtube.com/watch?v=7boL2J7ZuDM

Offline bytemaster

The premium for shorting below the peg will be proportional to the interest rate paid for going long....  the farther from the peg, the higher the effective interest rate.
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Offline jae208

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I'm willing to short at $0.45..






jk
« Last Edit: August 25, 2014, 04:48:52 am by jae208 »
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Offline Riverhead

If any motherfucker dares to short at $0.7 I will eat his collateral like a mama bear eats baby bear hunters


Oh snap!

Offline Gentso1

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If any motherfucker dares to short at $0.7 I will eat his collateral like a mama bear eats baby bear hunters

 :) I'll take that to mean I've misunderstood something here and that even if I'm really bullish on BTSX, besides damaging the peg, I shouldn't be willing to short too far below it if there are no longs at BitUSD 1-1

 Edit As an example. I think I'm very bad with this stuff, I may not understand it...

If you think BTSX will double or triple in value in the short term like most of us do, even if you think the peg will come back in line it seems you can short very far below it.

If Mr. B is going long at 0.8 BitUSD selling 10 000 BTSX for $10 000 they will make an easy $2500 profit if the peg comes back in line at 1-1

However by going short at 0.8  I now have the option to buy 10 000 BTSX at a later date for $12 500 worth of BTSX (the cost if the peg comes back in line) But I think the BTSX price will double or triple making those 10 000 BTSX worth $20 000-$30 000 so it's an easy trade to short at 0.8 BitUSD if no-one is willing to go long higher than that.

As I said I've never shorted anything, what am I missing?
I to am not getting it as I am thinking like you are. I believe in time that bitusd will peg close to actual USD. So if I can pick up some underpriced bitusd why not take easy profit and wait for a correction to buy back into btsx. Don't get me wrong I think btsx is going to rock in the next month let alone two. But the way I understand it you could profit either way.

The more I read the more I just say, "buy more btsx, and let the traders do the trading". I don't want to be a trader I just want to be the bank.....

Offline Empirical1

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If any motherfucker dares to short at $0.7 I will eat his collateral like a mama bear eats baby bear hunters

 :) I'll take that to mean I've misunderstood something here and that even if I'm really bullish on BTSX, besides damaging the peg, I shouldn't be willing to short too far below it if there are no longs at BitUSD 1-1

 Edit As an example. I think I'm very bad with this stuff, I may not understand it...

If you think BTSX will double or triple in value in the short term like most of us do, even if you think the peg will come back in line it seems you can short very far below it.

If Mr. B is going long at 0.8 BitUSD selling 10 000 BTSX for $10 000 they will make an easy $2500 profit if the peg comes back in line at 1-1

However by going short at 0.8  I now have the option to buy 10 000 BTSX at a later date for $12 500 worth of BTSX (the cost if the peg comes back in line) But I think the BTSX price will double or triple making those 10 000 BTSX worth $20 000-$30 000 so it's an easy trade to short at 0.8 BitUSD if no-one is willing to go long higher than that.

As I said I've never shorted anything, what am I missing?
« Last Edit: August 25, 2014, 01:34:51 am by Empirical1 »

Offline toast

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If any motherfucker dares to short at $0.7 I will eat his collateral like a mama bear eats baby bear hunters
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Offline Empirical1

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I think lots of people will be willing to short BitUSD, not a lot willing to go long at the start.

Might make BitUSD price trade too far below peg. But this will hurt BTSX price causing the situation to correct itself...

Seems like it may need interest rates if you really want to keep it at 1-1. Because a short may be willing to short BitUSD and pay X% interest to entice a long to trade.

You lost me here...why this will hurt BTSX price? If a lot of people go short bitusd, wouldn't bitusd fall relatively to BTSX price. Therefore BTSX will rise and will be worth more bitsud..

I think a lot of people are hoping BitUSD may track USD fairly close to 1-1 most of the time.

However because people are so bullish on BTSX and shorting BTSX lets you take a leveraged position on BTSX. BTSX bulls may be willing to short still at $0.70, this trading range will be so far from the peg that it could damage the credibility of the peg. This could make people sell BTSX. This will mean less BTSX bulls willing to short below the peg and the situation will correct itself.

I don't mind a BitUSD like that but it might not appeal as much to retailers and savers.

It seems to make it stable you should introduce free market interest rates.
Then you still short 1-1 but when most people are bulls like now you will pay a higher interest rate to short BitUSD as opposed to shorting very far below the peg.

Offline mf-tzo

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I think lots of people will be willing to short BitUSD, not a lot willing to go long at the start.

Might make BitUSD price trade too far below peg. But this will hurt BTSX price causing the situation to correct itself...

Seems like it may need interest rates if you really want to keep it at 1-1. Because a short may be willing to short BitUSD and pay X% interest to entice a long to trade.

You lost me here...why this will hurt BTSX price? If a lot of people go short bitusd, wouldn't bitusd fall relatively to BTSX price. Therefore BTSX will rise and will be worth more bitsud..

 

Offline Empirical1

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I think lots of people will be willing to short BitUSD, not a lot willing to go long at the start.

Might make BitUSD price trade too far below peg. But this will hurt BTSX price causing the situation to correct itself...

Seems like it may need interest rates if you really want to keep it at 1-1. Because a short may be willing to short BitUSD and pay X% interest to entice a long to trade.
« Last Edit: August 24, 2014, 10:34:37 pm by Empirical1 »

Xeldal

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Those who short BitUSD, are actually expecting rise in BTSX, not drop. It is going to be very interesting to see how this unfolds, but this is the only chain that allows margin.

In other words those who short BitUSD are putting up their BTSX stake as a margin. It's like buying more BTSX with BTSX. :)

could someone explain this to me in other words and in a more detailed way please? I didn't understand how it would work

When you 'short' something, you are selling it, without actually owning it to begin with.  A short also has a promise to buy back at a later time.  This is called covering your short.

So when you short bitUSD, you are selling it with a promise to buy it back at a later date.  With a short position since you don't actually own the item you are selling, some collateral is necessary to ensure you make good on your promise to cover at a later date.

In this case the collateral would be BTSX.  So in shorting bitUSD, the system will hold some of your BTSX as collateral until you cover.

If you are shorting bitUSD you are betting that the price of bitUSD relative to BTSX will go down.  If it does go down and you cover, by buying back the bitUSD you sold in your short.  You will have made a profit by receiving more BTSX. (the difference between your sell and your buy)

if you sold at 1BTSX per bitUSD and you bought back(covered) at 1.10BTSX per bitUSD you would make the difference as profit (0.10BTSX) (This example show BTSX rising relative to bitUSD or bitUSD falling relative to BTSX. which is what you want if your shorting bitUSD)

So, in a way, you have used BTSX to earn more BTSX by shorting and then later covering at a lower price.  Keep in mind that if the price goes against you, you may be forced to cover at a HIGHER price and lose some or all of you collateral.


Offline Akado

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Those who short BitUSD, are actually expecting rise in BTSX, not drop. It is going to be very interesting to see how this unfolds, but this is the only chain that allows margin.

In other words those who short BitUSD are putting up their BTSX stake as a margin. It's like buying more BTSX with BTSX. :)

could someone explain this to me in other words and in a more detailed way please? I didn't understand how it would work
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Offline Riverhead

I see this. I guess it makes sense you can't short BTSX as the supply is (kinda) fixed.



Offline tonyk

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It does now in 0.4.7 :)




Is it really changed tho in 0.4.7? What does it say when you switch the market to BTSX : BitUSD?


Pic 0.4.5
« Last Edit: August 23, 2014, 03:09:32 pm by TheOnion »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.