Bitcoin Forum

https://i.imgur.com/oW6Hz.png

Really, Bitcoinica gamblers? Really?!

People just don't learn.

..starfish is also on the sell-side often, mates..

When it’s on both BUY and SELL, it means Bitcoinica has connection issues to the MtGox feed atm.

If you see it on SELL, post it.


Absolutely not.

https://i.imgur.com/8vXKa.png

They really did it again. Fuck Bitcoinica.

I think that lately these starfish indicators have much more to do with the fact that Bitcoinica has serious liquidity problems. I have seen no signs of extreme bullishness recently which means that it makes absolutely no sense that there would be an avalanche of buying. The price doesn't indicate anything like that either. The market is very far from being overbought right now which means that the only plausible explanation to the starfish is that Bitcoinica simply has serious liquidity issues.

I would bet my entire bankroll that there is actually much less highly leveraged longs right now than there was before and that these starfish issues have more to do with the fact that Bitcoinica sucks, less with the fact that people "haven't learned".

Starfish appeared first when someone bought 15k to 5.7$. So it seems plausible to me.

It doesn't need to be overbought, just needs to be enough people new to trading and not realizing the dangers of leverage to make him run out of reserves.  I think this is a lot more likely than "bitcoinica sucks". 

Doesn't mean both aren't true though, we'll never know though. 

Do you suggest that Zhou is slowly transferring user USDs from MtGox to a Cayman bank account?

I'm not suggesting anything. I'm simply looking at what the market sentiment was before the big squeeze and what it is now and my conclusion is that the starfish comes up a hell of a lot easier than it did before. Either Zhou has put some new, very strict rules in place that cause the starfish to come up constantly or he simply has a lot less USD than he had before.

Or somebody, or some group of people, hold a shit ton of leverage on bitcoinica.  Perhaps they grabbed it on the way up from $2 and haven't been forced out of it yet.  Perhaps they're the reason we're up from $2.  Somebody with some serious balls and enough money could be trying to find out.

Here's my guess of how this works...

The "*" isn't doing anything to the bitcoin market.

For the "*" to appear, we can assume that bitcoinica has an excess of longs versus shorts.  In a market that expects growth, that is to be expected.  In fact it's to be expected that it will always be in imbalance one way or another -- representing the net market opinion of the future.  The excess is so great that all of bitcoinica's reserves have gone into backing those positions and has run out.

Since a customer-long versus a customer-short should have no (immediate) effect on the market we can ignore them.  The "*" appearing then means that bitcoinica has bought as much as it can with the funds it possesses.  Bitcoinica is effectively out of the game, and cannot be affecting the price any more than it already has.  And it can only have an effect equal to the size of the reserve.

Next... some deep pockets see the "*" and think it's time for a long squeeze.  What is the purpose of a long squeeze though?  It is to get cheap bitcoins.  There is no other purpose.  That makes the massive sell by deep pockets a bullish indicator.  They want more bitcoins not fewer.

It is to trigger a forced liquidation... i.e. a sell off.  At first the sell offs will reduce the use of bitcoinica reserves and hence the "*" will vanish as the squeeze begins.  Then the real action begins, the USD reserve is back and the BTC reserve starts to be used as people are force liquidated.  Of course much of the force liquidation can get caught by people who were waiting for it to happen and will be going long at the cheaper prices.  However, if the deep pockets are deep enough the force liquidations will result in people selling when they didn't want to, driving the price lower.  Now the deep pockets gets what it wants... a buy straight back up again, but with a much larger ask side.

We saw exactly this last month.  The drop to 4.64 was immediately followed by a ramp back up again.  The subsequent drop came from people panicing that there was real trouble, inadvertently giving deep pockets some more cheap coins.  It looks like some 25k deep pockets have tried to trigger that same thing again a couple of times over the last week, but it's not been enough.  They are presumably kicking themselves because they lose when the market doesn't panic sell.

I think we should all stop obsessing about the "*".  Ignore it.  It's just one more player in the market.  Also: the big January squeeze will have left people a lot less willing to use massive leverage so a squeeze is that much harder now.

edit: forgot to predict.  The presence of the "*" will tempt a few more deep pockets to try a squeeze.  It won't work but it will give the price a couple more kicks downwards.  Nothing deadly though, and the bounce back up to near where it started will come very soon after.

This, wake up people..
whats left for us...  table scraps, and Zhou knows it

Bitcoinica is flawed, and as usual, its designed for rich people to take advantage..

Seriously, I cant even get 2 bitcoins on leverage..  its a fucking joke..

The leverages have been tied up to manipulate us further!

I showed up for an hour, chill out.  If you want to buy you can now.

Dude..  Im chilled, wurd..

No thanks.  I'll buy when the star is on the other side.

Did you guys miss me? :D

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

Nice, that was, what, about a 1000BTC buy.

I guess most of you didn't really follow the events on Bitcoinica since the "big squeeze". The starfish appears more often for a reason - Zhou slightly changed the way it works after the incident. Before that, starfish would show up only when Bitcoinica was totally out of reserves and one couldn't even liquidate his positions or withdraw USD. It was changed since then so when Bitcoinica's reserves are depleting, they halt trading in certain direction to maintain their reserves for liquidations and withdrawals. That's why we see the star more often even though it's not "dangerous" as much as it was before.

Okay, maybe it's time to buy back in.

It appears so

I like your avatar... it seems to capture the mood of the market quite well. :P

His avatars are amazing, they never cease to entertain me.

"don't b scurred"

Did you try to withdraw recently?  For me it was as impossible as before - I don't think Zhou has any special reserves for withdrawals now.  As for reserves for liquidations of shorts - this was implemented long time before the "big squeeze".  More probable for me is that people started withdrawing from bitcoinica - because they cannot use the funds there anyway.

i told ya' it's meaningless :)

+1

This is a good thing in some ways, for one it makes Bitcoin price more stable. It's not as easy for a "Bitcoinica bubble" to form. Price going up will me more legit from now on. Rallies will be smaller but on the other hand, long squeezes are not as devastating so it stabilizes the situation both ways.

I withdrew USD as MtGox coupon twice today from Bitcoinica with no problem.  I drew down my position to where there's 0 margin and all profit.  No problems.  Easy as pie.  I don't understand why everyone doesn't use it.

Wait wait wait.

Why would a margin broker use their reserves for liquidations and withdrawls? Reserves are for materializing positions; if a person is liquidating or withdrawing their money, it's the money in their account.

Or are you saying Bitcoinica used to mix reserves and client assets?

There's been no word of bitcoinica storing assets anywhere other than their Mt. Gox account.  I suppose they could have some bitcoins offline, or have some USD elsewhere, but I doubt it.

At one point, traders with short positions couldn't close out their shorts because there was no USD in the bitcoinica MtGox account to buy back btc, but now Zhou keeps at least some USD reserves so people can close their shorts.  I think that was around November IIRC, many months after going public with the system.  Oversight?  Nah...

Seems that there's a large enough market demand for leveraged trading that people continue to use Zhou's rinky-dink system for a lack of alternatives.  Any real entrant would see a flood of users; then again, the whole bitcoin economy lacks maturity.  Magic the gathering exchange?  Really?

Makes me wish I had a week to burn and a quarter grand to convert into reserve.

Yes, I did withdraw 1k BTC yesterday, it was "pending approval" for a while but eventually it went through.
Also, I remember precisely that during the squeeze people had trouble with liquidating their positions, and after it they fixed that (Zhou announced this somewhere).

I did try that - it was hanging in 'pending approval' state for a few days - before I resigned and exchanged it to BTC.  When exactly did you do your withdrawal?  Maybe there are times when they approve them quickly.

After 2 days of waiting, I cancelled a $900 withdrawal and successfully (and immediately) processed three $300 withdrawals.  So there's some coding weirdness going on somewhere in there. (this was a few weeks ago, I don't know the situation now).

I can confirm what zby said. When I withdrew a minor sum of BTC as well as USD (both MtGox codes), the USD got processed instantly while the Bitcoins took a while. This was while it showed * on buy, though and a few weeks ago as well.

So we are back to where we were.

https://i.imgur.com/Zes5j.png

How could we not be?  Nothing has magically created more reserves for Bitcoinica.

Well - the sell to 5.3 could be a liquidation on bitcoinica - this would free some funds there.  But then it is also possible that the rally to 5.85 was fueled by those freed funds.

no more mr starfish