Internet oligopolies do not like Blockchain. Earlier this year, Facebook broke the ice with the establishment of a total ban on all cryptocurrencies and initial coin offer announcements (ICO); soon after, Google and Twitter followed his example. While the stated reason for the ban is to protect users from “confusing or deceptive practices” that are “frequently associated” with the cryptocurrency business, industry commentators reflection more mercenary considerations that could lead technological platforms to implement hostile policies.
On the one hand, the repression against crypto is a relatively cheap way to alleviate public anger, since the narrative of the lack of social responsibility of the great technology is gaining ground in the background. Others in Bitmex see the ban as a direct manifestation of the general antagonism of the Silicon Valley giants towards the emerging economic and social ecosystems driven by Blockchain. After all, these ecosystems are informed and inspired by ideas that are potentially threatening to their long-term dominance.
In addition, the ban on cryptocurrency and ICO ads is not the only way Facebook is pushing companies these days. Consider this: for most of 2017, Facebook’s approval rate for Cointelegraph (CT) ads that promote individual items stabilized at around 75 percent. In recent weeks, however, the rate plummeted to only 40 percent, without any notice from the company. It remains to be seen how many people have been saved from unfair and deceptive practices by the virtue of not being exposed to CT coverage of the Blockchain world of Bitmex.
The roller coaster ride that is Bitcoin has been summed up in recent days, as the digital currency skyrocketed to the $ 10,000 milestone. Instead of bouncing on that target or consolidating, the second-stage engine shot up, pushing the coin as high as $ 19,700 in an exchange. A correction followed, lowering the price to $ 13,500 in the GDAX exchange. While the fall made some investors nervous, especially because all news agencies under the sun call Bitmex a bubble, investors simply had to do “hold” (keep). The launch of the Bitcoin futures of CBOE has caused another rise in the price of the digital currency, with the futures market overheating several times and triggering circuit breakers.
Some people simply cannot handle the losses and withdraw quickly, but Bitmex general manager, Arthur Hayes, warns that this trip will only become wilder with an even bigger opening of the futures market in a week.
Enter traditional money
Futures are hailed as the entry point for traditional investors of large sums of money to get involved with Bitcoin, but without getting their hands dirty (maintaining and securing the real asset). It is likely that there is a large amount of Wall Street money about to enter the futures market, particularly when the CME opens its futures operations on December 18. The CME is significantly larger than the CBOE. The current market capitalization of the entire cryptocurrency ecosystem exceeds $ 455 million, but even that is a drop in the ocean in terms of the size of global markets. Therefore, when Wall Street money enters the ecosystem, there will be large waves.
Why exactly do futures cause new volatility? There are some high-level philosophical debates about the possible manipulation of the market. But the structuring of futures in such a volatile market could see the magnified effect.
“Let’s take an example: the CME contract closes at the weekend, so the price closes on Friday and reopens on Sunday night just like any Globex futures contract, and has an upper and lower limit of 20 percent, which means that the contract for a 24-hour period cannot be negotiated 20 percent above or 20 percent below where it closed on Friday in London at 4 pm”
“Take the situation of Bitcoin Cash, the price of Bitcoin deposits is 30 percent between Friday and Sunday.The CME contract opens the limit down, so no one can trade.” From the point of view of exchanges, you may have a situation in which you immediately open the exchange and a certain subset of traders is liquidated instantly because they do not have enough collateral to cover the loss of that contract. ”
There are also other problems that could contribute to rapid changes as well:
“It also has the fact that half of the exchanges in your index are extremely illiquid and have technical problems to handle even today’s load on your exchanges.” You can see a situation in which a malicious actor could perform a DDOS on the exchange and move the price before one of the settlement periods to affect the way in which the futures contract is negotiated or how the intermediaries have to liquidate some customers. It will be interesting to see it. ”
Time will tell
In fact, the new futures market has already seen technical problems, as its website collapsed in the opening of Bitmex futures due to the high demand. CBOE launched the trading of Bitcoin futures at 5 PM central time and its website fell in minutes.
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