Bitcoin Forum

The Bitcoinica * means that the margin traders are still fully in on leveraged, doesn't it?

I've been joking about it in a few threads, but really, what? Why/how? Getting force-liquidated means no control of the situation in which it happens, and even if a temporary bounce happens, the contest with day-traders and one another would be really hard.

How come I still see the *? Did really nobody liquidate? Or do new traders jump in on the reserves whenever one liquidates?

Edit: The situation now is strange. Sometimes, buyers come at such a time, so delaying liquidating can work... but only if the people who would buy don't see it coming and pull out. If a large trader dumps, the losses will be gigantic. How will this end, I don't know. Much less why they allowed it to get to this point.

???

I’m inclined to believe it. Why? They aren’t traders, they are gamblers. They want the casino to hit jackpot or lose their bet.

Bingo.  We all thought that online gambling institutions would adopt bitcoin.  We were wrong.  Bitcoin became online gambling.  Thanks bitcoinica!

It may be simpler than you think. The asterisk didn't show up immediately when people placed their longs, many of them in the $6.2 - $6.4 range, and some of them a little below $6.0. But when the price started to fall, more people got on the long train and they immediately started to lose on those positions. That's also when the asterisk appeared, but then it was too late.

When money is at stake, 90% of time people won't cut their losses but hope for the price to rise so they can exit with profits. So they wait, but the price instead goes down little more, and the asterisk is preventing it from going up. After certain period of time people with highly leveraged positions either exit in panic with big losses (which results in sell offs, driving the price further down) or are force liquidated (which results in even more sell offs).

So there you have it.

Edit: How it will end? No one can know for sure. But... We already saw this ending once:

http://bitcoincharts.com/charts/chart.png?width=800&m=mtgoxUSD&SubmitButton=Draw&r=10&i=Hourly&c=1&s=2012-01-18&e=2012-01-19&Prev=&Next=&t=S&b=&a1=EMA&m1=21&a2=EMA&m2=12&x=0&i1=RSI&i2=&i3=&i4=&v=0&cv=0&ps=0&l=1&p=0&

I'm usually bullish, but for me, we are again just before a big dip down. $4.63 (previous low) is the target.

I would hazard at 90 percent of the leverage available is tied up permanently with mr money bags..

We are all fighting over a small amount of levy.

M4v3R: Both exiting in panic and being force liquidated would make the * disappear, right?

But it is still there. So either new players jump in to buy on margin, or the panic/force exits did not happen so far -- they're still maxed out, no reduction. This is pretty extreme. Unless Bitcoinica added the asterisk for the lulz. :P

So... whatever situation triggers the margin traders to liquidate has a large influence now? Well, that's reassuring... ::)


Whoever it is lacks the money to pay the buy himself, or else there would be no need for leverage. There is a point or situation at which these coins return. And the drop right now should be very dangerous to any leveraged long position, so I don't think we're far off.



Edit:

4.64 it was. Feels good to have the peak order, and get it named as target too. ;D

Bitcoinica is showing its cards..

Huge advantage since its trading to mtgox...

They are everywhere!, it could be you! :O

lol :)

My best guess is that the action didn't start yet. We have seen one big dump in past few hours, but it wasn't tied to Bitcoinica. It was sudden and came out of nowhere - someone just decided to dump his coins on MtGox and cash out.

The asterisk is still there, because the real action is ahead of us. Exciting times :).

PS. of course it CAN end up peacefully in another way - Bitcoinica gets more reserves (Zhou gets them somehow or many people deposit USDs on them). The latter is now unlikely, because of coming weekend, though.

Just a couple of weeks of diminishing correction...


Then we get some fun times..

But right now the game is rigged, lets see how low we can go!

Grab your coins cheap! hahaha

Trades at 5.29.

The asterisk is still there.

WHAT IS THIS I DON'T EVEN

I think we should expect some force liquidations past $5.2 and then $5.0. Now what we see is calm before the storm :).

Unless they do the Super Mario bounce.

In that case, we're left with an illiquid and unstable configuration. I have little doubt it would just crash again, but in a different way and possibly with a huge delay in between. That would be a very annoying outcome, probably not good for both my head and the pockets of the people who pushed things down this road. Also, it would lengthen the bust, which in turn could hurt Bitcoin as a whole. It's a pain, so I'd prefer the way that keeps us sane and healthy.

Let's end it. End it here and save us another round of this. The leverage party has been on crack for a month now, it's high time. Let it go.

They’ll fall in a gap. https://www.youtube.com/watch?v=L-3XbeRzISc

This. Someone mercy kill the leveraged bulls. You could even do it via Bitcoinica itself, they still allow 10:1 for smaller funds (use multiple accounts).

Bomber Bitcoinica, do it again!

https://www.youtube.com/watch?v=cGF1NP-FrCU (https://www.youtube.com/watch?v=cGF1NP-FrCU)

Uhm... that'll be upspike Bitcoinica in addition to bomber Bitcoinica. How about we just do things the old-fashioned way, by trading with money we actually own?

We don't want them matching shorts with longs and somehow enabling even more margin trading... that wouldn't exactly help. ::)

Edit: The asterisk is gone! So at least something happened.

Buy & Sell are both cats-arsed starfished atm

Neither one is starfished right now.

Blink and its there. Blink again and its gone.

What kind of idiot went long after the 17th?!  I hope the long squeeze has stopped now, this is ridiculous >:(

According to Kahneman people gamble against the odds (that is irrationally) in two cases.  First is when they can gain much for little (even if their chances are very small) - this is the well known lottery fact.  The second case is less obvious -  it is when they can avoid loosing (even if gambling means that most probably they will lose much more).  When on bitcoinica people have negatibe PL they tend to keep the position even if they know that prices will probably fall.  This explains how the prices were falling in the autumn so slowly, but now with bitcoinica and forced liquidations this is a different picture and I don't expect the bitcoinica deleverage to be smooth.

A corollary of this point about people irrationally taking long shot bets is that people should take bets on extreme favorites more frequently.

There is a paper on horse racing, for example. The paper notes that betting on extreme favorites is systematically profitable. It just that horse races with sufficiently extreme favorites to overcome betting fees are quite rare.

So all of you irrational gamblers, leverage up those bets on things that seem almost certain to occur!

I thought this interesting in that it it doesn't attempt to construct a rational internal model of a gambler's thought processes in making irrational choices. I have seen people who knew to a certainty that they would lose if they followed a round to its inevitable losing conclusion, yet nonetheless enjoyed the pursuit of getting there. This could be one reason why.

Gambling
The almost-winning addiction
Near misses could heighten gambling addiction

http://www.economist.com/node/16056339

 ;D

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

lol bitcoinica gamblers

The casino is the hoppingest place in Nakamotown, the rest is pretty much one hot stand after another  ;D

People dont learn the lesson.  :D

This image is telling people to buy high and sell low?!?!?

-MarkM-

http://i44.tinypic.com/2zp12br.png

Confirmed.  We're not done going down yet.

What do you think, proudhon? Bitcoinica is completely fucking up the depth in both directions.

How will this all end?

And started short squeeze!  TIME!! silly now go long on bitkoinica. Now we all know how she earns

My guess is more large sell-offs and more longs getting squeezed out.  Eventually enough people will short, and at that point, the price will start going up.

I wonder what would happen if Bitcoinica were hit with a DDOS... Perhaps the market would re-adjust fairly quickly...

So, I got this right... someone just went 12k long and maxed out Bitcoinica long again? ::) Judging by the order book, nobody took the bait and someone has a problem. But let's see how it turns out, there might always be a greater fool showing up.

Let me give a prophecy though. One day, an operation like this will go wrong. Possibly harder than Tuesday last week. It might be today, or the next time, but I'm still pretty certain it must happen.

Last Tuesday obviously wasn't a violent enough beating to knock sense into people.  I think the worst is yet to come, unfortunately.  Bitcoinica has turned out to be the best worst thing to happen to bitcoin yet.

So true.

Somehow, Bitcoin never fails to surprise in this regard. There is ALWAYS something completely ruining trust in it. Anyone want to take bets on what it’ll be post bitcoinica?

I don't want to give anyone ideas...

Bitcoinica's algorithms are not our main problem. The uncertainty and volatility comes from traders who over-use them to the point where they become a market force.

A long squeeze should be nowhere near the size of the order book in proximity. That way, the money entering or exiting over margin trades is small, and the whole thing isn't much of an issue.

the fuck?!

There is no way people all just went long again.  I'm calling bullshit. 

On the flip side, asterisk is gone again :)

Keep in mind that when the asterisk dissapears, this doesn't mean that reserve problems are *gone*. It means that they are mitigated to a level that Bitcoinica can accept new orders. But it still is low on their reserves, and any bigger long position will trigger the asterisk again.

hmm, just tried to "lend" some money to zhoutong using a mtgox redeemable (USD).

I just get an error.