Dangerous game: fierce contract leverage and fallen people

"I opened a 10-fold leveraged empty order of 10 bitcoins in 5 minutes before the waterfall." "There is probably another 600 bitcoin empty this morning."


This is the three words that Biti founder Hui Wei said in the Bitcom 500 crowd. This is also the trigger for netizens to speculate on the death of Hui Yu.

Futures contracts, perpetual contracts, 20 times leverage, 100 times leverage, in the 24-hour endless battlefield of cryptocurrencies, they allow players to experience the bliss of a rich night, and can also push them into the abyss of bankruptcy.

Fierce contract

On June 5, 2019, Hui was killed and committed suicide, only 42 years old.

Some netizens broke the news on Weibo, and Bit easily ran away. "There was no one in the office one month ago." In this one month, Huiyi broke the 2000 BTC, which is equivalent to more than 100 million yuan.

It is reported that the BTC that was released from the market was from Bitco customers. With the chat record of “opening 600btc empty space” in WeChat group, some people speculated that the reason for Huiyi’s suicide lies in the one hundred million short position.

Hui Wei, a high-school student who graduated from the University of Science and Technology of China and the 27th issue of Cheung Kong Graduate School of Business, was praised by his former colleagues for "clear mind and transparent thinking."

Prior to founding Bitco, Hui was also a senior researcher at the IBM China Research Center and a senior product manager at Microsoft.

After leaving Microsoft, Hui Yi founded Beijing Tutuo Technology Co., Ltd. in 2008 as the chairman; in 2015, he founded the P2P platform, Shen Xiancai, as CEO.

This is a person who has been close to money.

In 2017, Huiyi founded Bitcom, which is known as the “same flush”. As a project dedicated to cryptocurrency market analysis, Bitco has been paying attention to the mainstream cryptocurrency trend in the market.

In April 2018, Biti announced that it has recently obtained a round of strategic investment from Softbank China Capital and Lanchi Venture Capital. But the news was officially denied by Softbank.

In the same year, Bitco launched several Bitcoin contract products. The contract is the lead of this tragedy.

From the flow of the WeChat group dialogue, we can find that on May 13, Hui Wei predicted that the price of Bitcoin futures has reached the top, and then it will fall back to 8% of 8000 and 10% of 7300, which is 6400~6570 USD. between.

At 10:55 am on May 31, Hui Wei predicted that "you want a waterfall, and within an hour, you see 7000 today."

Eight minutes later, he lowered the number a little: 5000 dollars, and confidently said, "At 8400, the main force opened 1.4 million empty orders, but the market is more than 3 million." The contract on the battlefield said, "On the 9000, it is going to kill the air, and then drop for 5 days."

More importantly, Hui Wei said that he learned that Bitcoin had a main force of 1.4 million short-selling orders at $8,400.

With the above arguments, Hui Wei said in the community that he has opened a 20-fold perpetual contract on OKEx and an empty order of 10 times the quarterly contract, and then continued to open a 100-fold empty order.

If you follow the expected trend, Bitcoin will call back later. But before the callback, Bitcoin suddenly rose to $9,000 in half an hour, and the 10x, 20x and 100x contracts were smashed.

Hui Yi was defeated.

a self-report of a contract player

"There is a problem." Li Fengmao (a pseudonym), a currency practitioner, said to 31QU, "The contract is not so fun."

A contract, also known as a futures contract, refers to a standardized contract that is set by the futures exchange to provide for the delivery of a certain quantity and quality of goods at a specific time and place in the future, simply to be a future business.

For example, for a user who has opened a single order, after the position is opened, the bitcoin goes up, the user makes money, the bitcoin falls, and the user loses money. On the contrary, for users who have opened an empty order, the bitcoin has risen after opening the position, the user loses money, and the bitcoin falls, the user makes money.

Li Fengmao said: "The usual way of playing is to add leverage to the contract, for example, 100 yuan to open 10 times leverage, gambling to win is 1000 yuan return, and losing 100 yuan is worth the money."

"There is nothing wrong with it." Li Fengmao also said that if the operation is true, he fell in the last darkness before dawn. "At that time, many people expected that Bitcoin’s rise had already been exhausted and difficult. For succession."

"I saw this news in the early hours of the morning. To be honest, I didn't sleep all night." Li Fengmao told 31QU that he is also a senior contract player.

“Working in the currency circle, everyone has their own way of making money, some with high wages, some with money to cut leeks,” Li Fengmao said. “I rely on contract leverage.”

"I don't have much money for my salary, but I have a credit card. I cashed in several credit cards and made a contract." Li Fengmao told me secretly 31QU. "I don't want you to say, I almost lost my wealth. Almost."

Enchanted by colleagues (Li Fengmao's original words), Li Fengmao touched the game of leverage, and since then it has been out of control, and set a few alarm clocks every night in the middle of the night.

"Because of the contract, the most important thing is to stick to the price of the coin, but it is easy to break the position at night, so I don't dare to sleep at night."

Like Huixi, Li Fengmao also successfully predicted the direction of cryptocurrency.

"On the first few days, EOS released its first anniversary and had a meeting. BM also said that it would release good news at the conference." Li Fengmao said with regret.

"According to previous years, the EOS before the conference will rise. But after the conference starts, EOS will fall." Li Fengmao said, "So I bought all the coins into EOS and borrowed from my girlfriend." Point money, about 300,000 before and after, heavy positions and opened 20 times leveraged multiple orders."

At 7:00 am Beijing time on June 2, the first anniversary of the EOS conference was held as scheduled.

"In order to be able to terminate the contract before the conference, I plan to not sleep for one night. Who knows that at 6:30 in the morning, I fell asleep. As soon as I arrived at 7:00, EOS fell and I broke the position."

The contract broke the position and 300,000 were paid to the east.

However, in the case of Hui’s experience, some netizens raised doubts while feeling awkward.

“How does Huiyi open a 100-fold contract on OKEx and there are tens of thousands of tickets? At present, many exchanges have a risk control system. Basically, many exchanges will not allow users to do so.

Encrypted currency world contract fiery

Since the beginning of this year, the first IEO has been confusing, and then the Litecoin has halved to lead the rise. Finally, after the bitcoin price climbed to 7,000 dollars, the players in the currency have taken it for granted that the new cryptocurrency cycle has started.

The gift of the currency circle to welcome the new bull market is leverage, contracts and various financial derivatives around the speculative currency.

According to statistics, the daily trading volume of the Bitcoin futures contract of the Chicago Mercantile Exchange (CME) has increased by 220% since December 2017. In contrast, since the beginning of 2018, the trading volume of the bitcoin market has dropped by more than 80%. .

According to The Block, in May this year, the Chicago Mercantile Exchange (CME) bitcoin futures trading volume and open interest reached a record high, the average daily trading volume of the month exceeded 13,600 (about 515 million US dollars), an increase of 36 compared with April. %, a year-on-year increase of more than 250%. The number of open positions also reached a record high of 4,602, an increase of 80% from May last year.

In February of this year, CME Bitcoin futures continued to set a new record for single-day trading volume. In the first quarter of 2019, the transaction volume increased by 40% year-on-year, becoming the quarter with the highest quarterly trading volume since CME launched Bitcoin futures at the end of 2017. In mid-May this year, CME's bitcoin futures trading volume reached a peak of $1.3 billion.

On June 3, the open interest of CME Bitcoin futures contracts hit a record high, indicating that futures trading activity is rising sharply.

At present, there are two types of contract products in the mainstream of the currency circle, one is a futures contract, and the other is a more subdivided perpetual contract.

Perpetual contract, a futures contract invented by BitMEX, differs from a general futures contract in that the perpetual contract is settled every few hours, and the perpetual contract has no delivery date. As long as the contract does not explode, the user can hold it all the time. .

We are seeing more and more exchanges starting to lock their eyes on perpetual contracts. Because for the exchange, the introduction of futures contracts, especially perpetual contracts, means greater traffic and profit points.

Looking at a few cases, I know how crazy people are about the need for cryptocurrency contracts.

After acquiring the futures startup Crypto Facilities, the crypto exchange Kraken began offering users a variety of cryptocurrency perpetual contracts. In just five days after the product went live, Kraken's trading volume reached $1 billion, an increase of 565%.

As the world's largest Bitcoin futures contract trading platform, BitMEX provides users with up to 100 times leverage to open or short bitcoin in the form of a perpetual contract, while Ethereum's leverage ratio is 50 times, and BitMEX daily trading volume reaches 100 in May. One hundred million U.S. dollars.

At present, OKEx and BitMEX are the two largest exchanges in the global cryptocurrency perpetual contract business. In March of this year, the two exchanges handled more than $2.1 billion in derivatives transactions per day.

The largest exchange-traded currency exchange, Kansei, is also preparing to build a sustainable contract trading platform, which is currently under beta and is expected to be officially launched soon.

According to non-small data, before October 2018, only two of the top ten transactions in the transaction volume opened futures trading – BitMEX and OKEx, and only BitMEX opened a perpetual contract. After October last year, 11 exchanges, including OKEx, have successively opened perpetual contracts, which can provide up to 100 times leverage.

There are also a series of exchanges that have launched futures contracts, including leveraged trading products opened by Bit-Z. In March of this year, Matcha MXC launched a perpetual contract. In April, BHEX launched a highly leveraged trading with no risk of bursting for the option business. BFX.NU, which trades futures as a channel, focuses on BBX, which is a cryptocurrency perpetual contract, and FMex, which is about to be officially launched in early September.

There is also a much-anticipated traditional financial institution that wants to compete in the futures contract market.

Bakkt, a subsidiary of the Intercontinental Exchange Group (ICE), will test its bitcoin futures contract this summer. Although it has been postponed repeatedly, it is expected to be “closely cooperating” with the US Commodity Futures Trading Commission (CFTC) because of its tradition. The endorsement of financial institutions and the blessing of compliance may strengthen the adoption of digital assets by large institutions.

Another "regular army" that is expected to enter the cryptomarket is ErisX, which is backed by TD Ameritrade, DRW and Fidelity, and will add futures contracts in the second half of 2019, awaiting regulatory approval.

As for why the exchanges have chosen to open contracts, the coin co-founder and the Odaily Planet Daily said, “When market volatility is not particularly large, the frequency of user transactions will decrease. If you open a highly leveraged trading product, It will amplify market volatility to a multiple of the ratio of leverage."

The above is just the tip of the iceberg. For the coin players, the contract is a game that is "small and big" and the cryptocurrency contract is in a gray field, which releases the human "gambling" nature to the extreme.

Carnival players push the cryptocurrency futures market to prosperity.

According to the data of coin coin, the current position of Bitcoin virtual contract exceeds 360,000. Correspondingly, every hour, thousands of USDTs have been opened, and the current one-hour new warrants have reached 6220 USDT, and the 24-hour new burst orders have reached 17.64 million USDT.

Dangerous game

In fact, although new futures and contract products emerge in an endless stream, problems are also frequent because they are still in the early stages of the industry.

The first is the trading system problem.

"The performance of many trading systems on the market at present is simply unable to withstand the influx of thousands of users at the peak of the peak, tens of thousands, and even 100,000 users." An entrepreneur who is entering the gold mining exchange, Lao Luo told 31QU, this is also The reason why most of the users of the exchange are unable to log in to the platform when they are "live and dead".

"At the critical moment, when you want to close your position, you can't get on the website at all." Mingxi, a player who has 2 years of experience in cryptocurrency investment, said that because it is still in the early stage of the industry, cryptocurrency transactions are still gray and unsupervised. The voice of the market is also one after another.

In particular, the exchange, in the absence of institutional constraints, "the platform has no private control of the data, there is no way to know, can only rely on the side of the platform."

After the explosion, Mingxi once confronted the trading platform staff in the community group, questioning why the App did not synchronize its transaction data in time during the transaction, resulting in no time for the operation, and ultimately lost.

The official reply is always "Because of the server, the APP synchronization is not timely, but the website will have all the transaction records, the user can log in and view." The dispute was not communicated for one day, and finally it was not.

In fact, every time the cryptocurrency market oscillates violently, a similar case can always be heard. It is not the momentary downtime of the exchange, that is, the market has risen sharply or plummeted. The user has no time to operate, but he has no choice but to explode. He can only watch the notice of the burst received by the mobile phone, and he is at a loss.

In addition, in addition to the trading system and regulatory gaps, there are also a handful of well-balanced futures contract products in the cryptocurrency market. For example, the earliest domestic futures exchange 796, once known for futures, but because "the transaction rules are not set up properly, the technical structure is too simple, can not carry out major surgery on the exchange, only partial tinkering", resulting in the use of rules loopholes Manipulating the market can only end in the end.

It is understood that cryptocurrency exchanges including OKEx, Firecoin, 58Coin, etc., have basically occurred in the event of suspension of trading and adjustment of contract specifications. At present, complete futures contract products and fair transactions by users may be a luxury.

As for Huiyu’s short position, how does it happen? Some people say that because Huixi has exposed his position chart and given the opportunity to the opponent, others said that it was targeted by the exchange and was directed to blast…true The reason is that we are no longer known.

At a time when the current cryptocurrency futures contract rules have not yet been established, speculators who dream of getting rich overnight must understand that this is actually a dangerous game.

Bloodstained futures contract

The madness of futures contracts, not just the currency, the game of money, there is no greed.

On September 29, 2017, Fu Xiaojun, a senior investor in China's rubber ring, jumped to his death due to a burst of positions.

What makes people feel shocked is the screenshot of the last few days of the deceased's account. The bloody figures make people feel a bit cool.

According to the delivery order and the jumping time, it can be seen that on September 13th, the customer's principal amounted to 10,152 million. As of September 26, the account loss was only 32.1 million. In the first ten days of Fu Xiaojun’s death from jumping off the building, the book loss was as high as 140 million.

The reason is that on the night of the 28th, rubber futures varieties ushered in a plunge again. As of 22:00, the recent rubber 1710 has fallen more than 4%.

These four points have become the last straw for the predecessors of Fu Xiaojun.

Earlier on July 24, 2015, Liu Qiang, a Chinese futures legend and Ruilin Jiachi hedge fund trader, committed suicide on the top floor of the Beijing Huamao Center Hotel.

According to a person familiar with the matter, the direct cause of the crush on Liu Qiang was the stock plunge that began on June 15. When the market fell below the 60-day moving average in mid-to-late June, Liu Qiang turned his back on his usual investment philosophy. He also made a lot of stock index futures at the high position, and even invested in stocks to buy stocks.

"Too much to rely on one thing, he will definitely become your biggest weakness." Before suicide, Liu Qiang wrote this sentence on the blog.

There are countless cases.

From stock to currency, from contract to futures. With so many lessons from the past, why are there still many people rushing?

Nothing is more than "interest".

Marx once said that if 50% of the profits can be obtained, the capitalists can take risks and get 100% of the profits. The capitalists dare to trample on all laws of the world; if they can get 300% of the profits, the capitalists will risk being murdered.

As long as the interests are large enough, there is no shortage of "gamblers" in the market.

On some contract platforms, “master” is a must. Anonymous contract masters are ranked in a row according to the rate of return, and the yield can reach several hundred a week. The crazy money circle players always have an illusion that they can use the tiny principal, like a master in the list, to step on a cycle and get rich overnight.

Hui Wei is the first person to commit suicide due to a futures contract, but it will definitely not be the last one.

Text /31QU Editorial Department

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