A Word About "Arbitrage"...

[Sig]

Wow. After your rant directed toward me on seeing other perspectives here:

https://www.elitetrader.com/et/threads/a-word-about-arbitrage.356875/page-5#post-5349642

Which I agreed it is possible here:

https://www.elitetrader.com/et/posts/5349763

Then @Same Lazy Element says the same thing @misterkel and I have been saying, that is it is not counterparty risk, even though there are risks present.

You write the above after melting down yet again, and say I'm focused on "winning" when you refuse to consider a viewpoint at least 3 others have been saying while criticizing myself for something you are blatantly doing.

sle didn't say a single word about non regulated exchanges. I don't believe I need to be civil anymore.

I not only considered the viewpoints I agreed with them! There isn't a significant counterparty risk issue on CME, that's the foundation of what I've been saying since the beginning of the discussion. And as you agreed 2 posts ago, we're talking about CME at this point. So of course I would agree that it is not counterparty risk on the CME!

You're really getting caught up on turning this into a personal feud here, not sure why?

 

[tsznecki]

I not only considered the viewpoints I agreed with them! There isn't a significant counterparty risk issue on CME, that's the foundation of what I've been saying since the beginning of the discussion. And as you agreed 2 posts ago, we're talking about CME at this point. So of course I would agree that it is not counterparty risk on the CME!

You're really getting caught up on turning this into a personal feud here, not sure why?

Let's cut to the heart of the issue. Your position is that CME BTC futures trade higher than an equivalent spot because there is no way to arb that out, and that non regulated exchanges futures trade higher because of counterparty risk on non regulated exchanges.

Everyone else is saying, yes on CME being that way, no on non regulated exchanges futures trading higher being a symptom of counterparty risk.

You assert that if CME was to allow spot as collateral the basis on CME futs would disappear immediately. That's an assertion pretty much everyone agrees with. You also assert that by your position underlined above that when the CME basis collapses, on non regulated exchanges the basis would not disappear because it represents counterparty risk.

Whereas, my position(and others) is that the bolded above is a bunch of bullshit from you, and that on non regulated exchanges the basis is there for some other reason than counterparty risk.

Can you prove your assertion? Nope. It's a nice theory.

I'm not sure how you couldn't follow these assertions that you and I(and others) have been discussing for the last 6 pages or so. There's some serious mental gymnastics going on in your head with some pretty pathetic gaslighting from you.

How much money did you lose in Mt.Gox?

 

[bone]

If you could buy the bid for five Bitcoin on one or multiple exchanges and sell one BTC futures contract at the offer at CME - and then turn around later that same day and sell your five Bitcoin on one or multiple exchanges at the offer and be best bid for one BTC futures contract and manage to get filled on that - life would be grand I would imagine.

And it doesn't really need to get more complicated than that, boys. Although you're not going to be so lucky with execution in real life, there's money to be made there if you have your speed and execution dialed in to the tits.

 

[Sig]

Let's cut to the heart of the issue. Your position is that CME BTC futures trade higher than an equivalent spot because there is no way to arb that out, and that non regulated exchanges futures trade higher because of counterparty risk on non regulated exchanges.

Everyone else is saying, yes on CME being that way, no on non regulated exchanges futures trading higher being a symptom of counterparty risk.

You assert that if CME was to allow spot as collateral the basis on CME futs would disappear immediately. That's an assertion pretty much everyone agrees with. You also assert that by your position underlined above that when the CME basis collapses, on non regulated exchanges the basis would not disappear because it represents counterparty risk.

Whereas, my position(and others) is that the bolded above is a bunch of bullshit from you, and that on non regulated exchanges the basis is there for some other reason than counterparty risk.

Can you prove your assertion? Nope. It's a nice theory.

I'm not sure how you couldn't follow these assertions that you and I(and others) have been discussing for the last 6 pages or so. There's some serious mental gymnastics going on in your head with some pretty pathetic gaslighting from you.

How much money did you lose in Mt.Gox?

At this point you're just being an asshole. Which is a shame, because although I think you're a smart guy and have interesting points to make, I have a pretty strict no asshole rule, life's just too short. And after a couple pages it's clear you're bound and determined to turn this into some kind of bizarre personal feud. So good luck in your future trading, crypto or otherwise. Look forward to having intelligent, adult conversation with you in a few months when you've simmered down and hopefully matured a bit.

 

[Sig]

The futures trade at a premium to spot becuse of the inability to immediately collapse the arbitrage and thus exposing you to a margin mismatch on a tail move.

As long as you can hold spot and the future at the same place where both are calculated in margin (as is the case on some of the deregulated exchanges), a tail move in BTC price wouldn't cause a margin mismatch. Just somewhere like CME in the current environment where you can't hold BTC in native format in your account. The tail move would be a big opening in the difference between futures and spot. The question is what would cause that in a liquid, functioning market where that would just be increasing the arbitrage opportunity?

TThere is also a meaningful risk of getting a nasty settlement print that you can't trade

The ICE BTC futures are EFP and they seem to trade in line with the CME futures, so I'm not sure that's driving any price differences.

 

[tsznecki]

At this point you're just being an asshole. Which is a shame, because although I think you're a smart guy and have interesting points to make, I have a pretty strict no asshole rule and after a couple pages it's clear you're bound and determined to turn this into some kind of bizarre personal feud. So good luck in your future trading, crypto or otherwise. Look forward to having intelligent, adult conversation with you in a few months when you've simmered down and hopefully matured a bit.

Oh how unpredictable. You backed out when I called you out on your faulty assertions with no proof.

Sure see you in a few months. Hopefully CME will have allowed crypto to be held as collateral then and basis only collapses at CME so you can backtrack and point to it. LOL. Good luck.

 

[traderjo]

If you could buy the bid for five Bitcoin on one or multiple exchanges and sell one BTC futures contract at the offer at CME - and then turn around later that same day and sell your five Bitcoin on one or multiple exchanges at the offer and be best bid for one BTC futures contract and manage to get filled on that - life would be grand I would imagine.

And it doesn't really need to get more complicated than that, boys. Although you're not going to be so lucky with execution in real life, there's money to be made there if you have your speed and execution dialed in to the tits.

So Bone to put the matter to the rest (if we can)
1) Such SPOT / futures trade profits seems to be doable on unregulated exchanges according to people who claim it..
And why this diff is pronounced on these exchanges ? is it natural or due to the issue of "Exchange Risk" as mentioned by Sig?
2) On Regulated exchanges like CME there is no SPOT so can't be done! Correct
3) a combination of Spot on Unregulated exchange and Futures on CME ... doable with more margin money? and what are the true risks?

I mentioned another example of OTC CFD on Gold (on Axi) what you think about that same "broker risk" issue

 

[bone]

If you are in and out of the market like a mechanic, (As you would be as an arbitrageur) I would suspect that your security risk for the spot bitcoins on unregulated markets is substantially minimized. In other words, I’m guessing that you’re minimizing your exposure to your wallet being hacked. But your security exposure on these unregulated exchanges can never be eliminated. If you’re holding a position for four minutes that’s less time for your wallet or placeholder to be hacked than holding a position for four hours (or days or weeks or months).

I would guess that the bigger issue with these disparate unregulated exchanges would be ECN message capacity and your ability to compete with other arbitrageurs. You would also need a detailed knowledge of the various order matching algorithms in order to devise a strategy for injecting buy and sell orders, cancelling orders, and receiving fill confirmations. I have no direct knowledge of this, but my experience tells me that your ability to compete against other firms within the order queues of these various unregulated crypto exchanges will make or break any arbitrage strategy.

None of this will be a problem on the CME of course.

Another consideration will be finance - you’ll get no intraday cross margin credit, so you’ll need to capitalize both your regulated futures account and your Crypto account at full notional capacity.

This just my WAG and I have no experience arbing Crypto - but these would be the first areas I’d address when designing an arb in the space.

So Bone to put the matter to the rest (if we can)
1) Such SPOT / futures trade profits seems to be doable on unregulated exchanges according to people who claim it..
And why this diff is pronounced on these exchanges ? is it natural or due to the issue of "Exchange Risk" as mentioned by Sig?
2) On Regulated exchanges like CME there is no SPOT so can't be done! Correct
3) a combination of Spot on Unregulated exchange and Futures on CME ... doable with more margin money? and what are the true risks?

I mentioned another example of OTC CFD on Gold (on Axi) what you think about that same "broker risk" issue

 

[johnarb]

Arbitrage in 2017 crypto

https://twitter.com/x/status/1379440813902594058

Discussion around 18 minute mark

https://podcasts.apple.com/us/podca...i-billion-crypto/id1056200096?i=1000515303033


Korean premium is back, but I don't know if this arb is possible there

https://elitetrader.com/et/threads/bitcoin-price-thread.315402/page-318#post-5359485

 

[tsznecki]

Arbitrage in 2017 crypto
Korean premium is back, but I don't know if this arb is possible there

No. Not unless you are native Korean and have some deep connections to bypass the 50K limit. I looked into this heavily in 2017 and even made plans to move to Korea/Japan.