I don't know, when you use words like "haters" and "passion" and bring up Mt.Gox and your trading experience back in 2013 it sure looks like you got triggered and melted down. But sure, cognitive dissonance is a bitch right? Since we don't know if/when CME will allow spot to be held as collateral this is merely a hypothetical scenario currently. It's one I'm inclined to agree with and if the basis collapses only on CME/BAKKT then you are right. If basis doesn't do that then you are wrong. I read your explanation. I also posted mine previously. This difference is I'm pretty confident I'm right and you are wrong in the underlined above. Why? I've already seen basis collapse in CME BTC futures in previous years. Empirical sure, but I'll trust my experience over your words.
You're right. It was a bit snarky. I actually meant it not as an intelligence insult, though, but more as a reference to conventional markets which seems to be more your area of expertise. So, it was not meant as bad as it admittedly came across. cheers.
Now, who's being insultin? I'm not an evangelist. I have vetted the exchanges thoroughly and I have come to a personal determination that certain exchanges are indeed very secure. The trades are sitting there as an arb, for anyone to take. That's all I am saying. It's a fucking good trade, with excellent R/R. Sure, I'm an evangelist for a good trade, fair enough. Really? comparing 2013 Mt. Gox with very early days security against state of the art Binance? You don't see a difference there?
So I went back and read all your posts here carefully. Perhaps I am dense but I'm not seeing an explanation for why you think BTC futures are persistently trading with an upward slope given there is no carrying cost to Bitcoin? Best I can tell is that you think it's only there because those with sufficient funds to arb it away are unaware that it's there, but happy to be corrected on that? I'm guessing you're a young bright kid or else you haven't experienced something that everyone thought was failproof failing. Unfortunately no matter how smart you are, you pretty much have to experience something like Mt. Gox to know how much you don't know about the future. Sitting in the fall of 2013 we all thought Mt. Gox was entirely secure. We were as certain about it as you are about Bitmex today, pretty much everyone in the bitcoin trading community. We looked at it and said "comparing Bitfloor or MyBitcoins with very early days security against state of the art Mt. Gox, you don't see a difference there?" Again, if you saw it differently at the time I'd be interested to know? Hindsight is always 20/20 and the past always looks archaic and the present always seems secure because it's better than the past. It seems to take maturity to realize how much you don't know that you don't know about the present and the future, and sadly that maturity seems to come only with age because we humans require experience to really grasp these things. So you'll get there, but if you're willing to listen to the people who have experienced these things instead of denigrating that experience you'll be able to get there faster than your peers in whatever endeavor you're engaged in. That could be a very real advantage to you in life.
I answered and will answer again. Futures are leveragable, the underlying is not (unless you borrow fiat at high interest, which rex the trade). Therefore, directional traders leverage up many multiples on futures, while arb traders have no leverage to apply because the underlying cannot be bought without high interest fiat loans. Therefore, each directional trader can use up to 100 X the leverage of each arb trader. Directional traders are simply swamping arb traders with far greater order flow. Moreover, the crypto markets are relatively immature and most traders seek directional rapid returns because they don't understand R/R. Also, futures do not persistently trade with an upward term structure. They do so when BTC is or has been uptrending strongly. Sometimes they are fairly flat, and occassionally they diverge downward for weeks at a time. That would point more to a price action explanation rather than an underlying trust issue. Your theory (if I get it right) is that futures term structure is in major contango because of lack of trust in the exchange. Further, that term structure is fairly tightly and consistently matched in the CME futures because there is no way to properly arb on those markets. Your theory would be correct if CME futures showed a disconnect when the crypto exchanges term structures altered significantly. I don't know if this has happened or not, but your theory has more moving parts, imo, than mine. I've also traded these markets a lot and seen the moves and worked as a professional crypto analyst, so I do trust my analysis, though I'm not absolutely certain of the underlying causality. Maybe 70% likely. In terms of crypto problems, my greater concern is that the markets are manipulated, sometimes heavily. I'm more troubled by the flash crashes than the hacks. I see them as kind of a red herring.
None of this answers a basic question: If Bitcoin has no carrying costs, then the futures should trade exactly in line with eachother. Why are they in contango?
OK, that sounds like a good explanation of why it would tend to try to move in a direction, but that's not what we're talking about here. What we're talking about is the explanation for why any deviation in either direction isn't arb'd away in seconds? The risk free rate on short term treasuries is sub .1%, this is 10% plus, two orders of magnitude larger. If Mr. Market didn't think there was any risk, that would be arb'd away in a heartbeat, just like any deviation in the S&P futures from spot taking into account the risk free rate and dividends is. Or any of the other financial futures, all of which trade within a hair of the equation that governs the risk free arb condition. The only difference between them and Bitcoin futures trading on unregulated exchanges is the requirement to entrust money to an unregulated exchange. Even the flash crashes don't impact you when you've got BTC and BTC futures at the same broker collateralizing each other unless you've got some serious lag on futures following spot and a hair trigger autoliquidation algorithm going on.
Regarding the term structure @newwurldmn @misterkel has already said it but I will too: The basis does not always stay in massive contango. If BTC/crypto is not in a bull run the basis frequently trades near 0 or even negative/backwardation. The answer to me is the leverage aspect. Spot cannot leverage up even under margin for players who want in, so players who want upside pile into futures/swaps to get the leverage needed. Rational? Perhaps not but that's how it has been working since 2017. The above is not theory despite what @Sig claims regarding counterparty risk. Many who trade basis will speak to it. @Sig isn't completely off base with his theory but currently, it's just a theory.
I'm only quoting this part above as I have no issue with the rest of your post: Since we are talking about experience I'll share the relevant portions. I have 6 figures of P&L from running basis and I watched as Mt.Gox imploded in 2013. If you didn't think that when Mt.Gox's spot prices traded higher than every other exchange in the world then you might want to google Dunning Kruger. Also I have had at least 3 crypto exchanges I was on go bust, luckily nothing lost there(knock on wood). These names made the news. Also I watched as an exchange I did heavy volume on have their spot price for a few months trade 5+% over global exchanges. I've seen counterparty risk. In a likewise fashion to you, I would suggest just because you had 1 experience way back in the day(Mt.Gox) you should probably keep an open mind and not think that just because you were an early adopter you can tell us how things are currently in crypto.