Bitcoin Forum

http://charts.bitcoinica.com/interest_rates

Did somebody leverage themselves a nice sub-5 dip?

Starfish on sell!

http://www.freeimagehosting.net/newuploads/f73yl.jpg

I wonder how to understand the interest rates.
If i deposit BTC at Bitcoinica, i get 1.69% a Day ?
That would be a damm good savings Account.

What does this starfish really mean? No shorts possible? Does this mean that bitcoinica has no bitcoins in reserve?

I believe it is 1,68 pip per day.
The APY is 6.33%

1.0633^(1/365) = 1.000168187

So per day, you get right now = 0.0168%

Exactly as you say. This means only longs can be convered.

thanks. does does not sound like it is a liquid platform

yeah it means bitcoinica is out of coins to hedge, and there are more people selling than buying internally. Although I thought they stopped this. Perhaps a lot of customers converted their coins to USD internally also.

It presents an interesting problem and opportunity to those so inclined.

They thought of a solution in the way of paying/charging people interest on their deposits/positions and it worked really well for USD liquidity since the interest rates were huge. Since BTC interest rates weren't that attractive until last night it seems people were not interested in storing their BTC in Bitcoinica, but I guess more people will do so now since the APY interest rate for your BTC deposit is currently 6.31%. I think this is a temporary problem.

Madness is still going on:

http://www.freeimagehosting.net/t/rlqv8.jpg (http://www.freeimagehosting.net/rlqv8)

Great, now both sides are highly leveraged... no matter where we go from here it's going to get messy real quick.

I just pulled out of Bitcoinica after using it for months.  The algorithm that determines the spread is rigged, I have no other way to explain it.  The interest rates are nice, but if you look at the history they often fall to 0% throughout the day for no reason.  But the spread is horrendous.  The price on goxlive, btccharts, clark moody can be swinging wildly up and down on my screen, and yet the Bitcoinica spread will stay dead flat for hours.  I'm used to watching real forex spreads react immediately to the market up and down all day.  That's ignoring the fact that the spread is super massive, which limits you to swing trading only.  If you overlayed a candlestick chart of Gox on top of the Bitcoinica "Daily Quote" chart you would end up with a huge "WHAT THE FUCK!?" look on your face.  I guess what that does is even make swing trading impossible.  During any big rally or dip the spread takes so long to react it's impossible to actually make a profit.  I suppose if we were back in the days where the price moved $5 at a time you could make money, but not in this current market.

I have to agree with most of that.

Bitcoinica pricing algorithm is very accurate. However we are not interested in the trading prices. We only concern about the liquidity. Sometimes 50 BTC can move Mt. Gox prices by a few cents, they won't be able to move Bitcoinica prices.

I personally think that Bitcoinica prices are good for offline trading, because it's not the price that was traded by others seconds ago, it is the price that you can trade at, immediately.

Now we have a much faster order processing system, and guarantee 100 BTC liquidity for a single order. The associated liquidity can be as high as 1000 BTC. (So sometimes you can place a 1000 BTC market order and trade without slippage or re-quotes!)

If the 100 BTC liquidity is true, http://help.bitcoinica.com/kb/apps/liquidity needs to be updated.

Now Bitcoinica is paying shorts...

https://i.imgur.com/Ky7ht.png

What happened?

I think, shorting "wave-lemmings"  :P

lol, i dont think $.09 covers a shorts losses from a rising price  ;D

but if you close the long position 4.95 (just a guess)...

And now its more expensive to be short (-$0.14) than long (-$0.11)!

Like taking candy from a baby.. :D

I am not so optimistic .. (waiting for the moment that would buy again)  :P :P

Short Squeeze here we come... maybe they will cover above 5.50

Why do you think a short squeeze is coming?  If anything, it's already come and gone.

Because it cost more to short bitcoin right now, and cost less to go long. So if it cost more to short bitcoin then alot people are either short or have a highly leverage position or have no us dollars. The interest rate is there so they can have a equilibrium and have bitcoins and US dollars.

So, the price goes up to $5.40ish, the costs of shorting/going long get flipped around, and the price comes back down to ~$5 after dipping below $5 again.

Depends you need to factor in mtgox sellers, are people willing to sell below 5 again and stay in oversold, short squeeze coming and new trading range.

There are many reasons why we're stuck in the 4.8-5.5 range right now.  Chief among them:

(1) Psychological S/R after oscillating for a long time
(2) Sheer number of bids/asks
(3) Moves seem to be manipulated; consequently, profit-taking happens right after we get to $5.5 or $4.8.

For a bullish breakout, we need someone to buy a large volume of coins right when the price gets close to the top end, before any asks can form.  This hasn't happened yet because it is a ridiculously stupid thing to buy at $5.5 due to the 3 factors above.

However, there is one account on gox that will be buying in such a situation, and that's Bitcoinica.  For the past three times we've moved up to $5.5, we haven't had a starfish on the sell side, so the short squeezes were a bit too weak... but this time, all conditions seem ripe for a breakout. 

If everything happens correctly, this is it.

I concur about the role bitcoinica plays. I think the stability is also due to an increasing number of passive market-makers (people with bots playing both sides of the order book) - accounting for the increased depth on the order book that others have mentioned. I bet some of these guys are experienced traders playing with pennies compared to the funds they use on wall street. A passive strategy is good for anyone with lots of skin in the game, because its less risky than outright buying a bunch of coin.

I think what we're seeing on MtGox is active traders on bitcoinica betting against passive market-makers. I wonder which side will come out ahead..  8)

It's back... not quite as strong as last time but still +$0.01 for longs, -$0.19 for shorts:
https://bitcoinica.com/pages/interest

That plus the * on sell means bitcoinica is already leveraged short. But the mini-wall was put up by a market-maker. Unless he removes that mini-wall or somebody sells into it, the bitcoinica shorts are about to take a loss.

I think bitcoinica will soon be forced to buy a BTC - that would hedge against a shortage of coins.

Get ready for it...

http://img706.imageshack.us/img706/6518/1subadultgrizzlybearsta.png

Ready to sell again.  Hopefully I can get out in the $5.40s and buy more under $5 again.

I got out at $5.10 this time, getting ready to go in at $4.90. then I'll get out $5.05 and go back in at $4.95.