The Bitmex and Bitfinex futures markets are settled in BTC and it's been blatantly clear that someone (most likely the exchange operators) are consistently manipulating the futures market (most likely to wipe out margin traders who don't know better) with short squeezes that return back to the norm within hours.

https://i.imgur.com/LpgnksQ.png

CBOE and CME futures being cash settled is a joke, and removes any incentive for the risk associated with the long position actually acquiring BTC, further proving the large traders just want to play with the tool for speculative market volatility and not actually facilitate using or acquiring the asset itself.

https://medium.com/@bitfinexed/latest

It's not the exchanges who are behind those spikes.

Source: someone who is working on a bot doing that kind of things

And because of the way the market works, there is no need to coordinate with anyone else doing it (ie: those spikes are self synchronizing)

Those "manipulations" also happen in the traditional markets (forex, ...), but due to liquidity and general sophistication they are much harder to spot, and dangerous to do if you don't know what you are doing (dangerous from a financial perspective, they are perfectly legal).

   It's not the exchanges who are behind those spikes.

Please. If anyone is in a position to gain the most from market manipulation like that, it's the exchanges and there's a bucket list of evidence and malicious behavior from Bitfinex that would make it very surprising if it was some random outsider causing these types of movements.

Bitfinex and Bitmex margin trading volume has increased significantly and for the exchange operators have access to

  (1) order book + margin call data
  (2) ability to falsify trades and capital due to no audits

With those, it becomes insanely trivial to set some bait let the fish bite and simply drain the water or pump it back in on a whim because the order book is just a database and there's no accountability or auditing to keep the market exchanges honest.

There's also allegations about exchanges like Bitfinex where the owners/management trade on their own exchanges [0]. With insight on order book and people's stop prices there's an obvious conflict of interest there, as one can easily go stop hunting and manipulate prices. It's an unregulated market, and exchanges want to keep it that way (like how Binance's moving operations to Malta)

[0]: https://medium.com/@bitfinexed/wash-trading-bitcoin-part-ii-...

"CBOE and CME futures being cash settled in a joke"

How do you mean? The CME S&P e-mini is cash settled. In fact all of the equity indexes futures products are cash settled.

"...and removes any incentive for the risk associated with the long position actually acquiring BTC"

They contract settles to a VWAP of physical transactions of BTC and converges to this point at settlement. It currently has a bid/ask price that surrounds the bid/ask of Gdax. I would say the risk associated with the futures contract is... effectively the exact same as physical holdings, less the risk you have of keeping large amounts of USD or physical coins at the exchange.

"further proving the large traders just want to play with the tool for speculative market volatility and not actually facilitate using or acquiring the asset itself"

I think your logic up to this point is flawed and that the conclusion you are attempting to draw is both baseless and lacks a point. If the purpose of "large traders" was to just "play" for speculative market volatility then... so what? I suspect you don't think that markets require speculation in order to become liquid and fair, so perhaps we live in different worlds.

Additionally, "not actually facilitate using or acquiring the asset itself" -- just for giggles: how many people that you know that screw around in the coin space are actually there to _use_ the coins as currency? Effectively everyone I know is just trying to ride the rollercoaster and make a profit and don't really care about the far off future of the stuff.

If CBOE and CME traders on the long position had to take BTC, that would be more indicative of the market interest in the asset. Instead what exists now with CBOE, CME, GDAX, Bitfinex, Bitmex, etc is an ecosystem ripe for any insiders at the exchanges to front run, falsify volume, and manipulate the order books to margin call.

  just for giggles: how many people that you know that screw 
  around in the coin space are actually there to _use_ the 
  coins as currency? Effectively everyone I know is just 
  trying to ride the rollercoaster and make a profit and 
  don't really care about the far off future of the stuff.

Exactly. Agreed.

Ya, this article doesn't really make sense in this particular case as an explanation for Bitcoin's behavior. Though in general I do agree that shorting is important for the health of a market, this Bitcoin bubble played out exactly like every other Bitcoin bubble, and in all those previous cases shorting was as difficult as its ever been (which, actually has never been that hard, to be frank - people always insist that shorting Bitcoin is so hard, but it's not at all and never has been).

The only markets where you can short bitcoin are sketchy overseas exchanges with low volumes and a history of problems both depositing and withdrawing money.

No serious investor is going to be putting money in bitfinex or whatever to short bitcoin.

>The only markets where you can short bitcoin are sketchy overseas exchanges

probably because no reputable country's SEC equivalent would let that happen

>low volumes

bitfinex is one of the largest exchanges by volume

>a history of problems both depositing and withdrawing money.

if this is happening, it's not happening with any of the major exchanges that support margin trading. any time depositing/withdraw issues appear on an exchange, prices quickly deviate from the rest of the market as the supply of fiat/crypto diminishes.

You can short Bitcoin on the Chicago Mercantile Exchange:

http://www.cmegroup.com/trading/bitcoin-futures.html

But you can't... the future is a derivative of Bitcoin, not actual Bitcoin.