Bitcoin Forum

Margin longs on bfx are still at about $20M

then why is interest rate for usd so low still?

I'm assuming supply of fiat is huge?

Fair enough. Do you know when these long positions were started?  If it's fairly recently, I can understand why, but if it was throughout the year, then lol.

It's actually been relatively steady since August. Last peak was first week of December at 25M...That's what bothers me, when did these positions open?

https://i.imgur.com/Vh5pOhr.png

I estimate the risk at around $3M give or take a little.

edit:
The BTC swaps are in a dangerous predicament. Mainly that big spike near the low. A good bounce and we could be in for a ride.
When fewcoins made all those claims about a short squeeze over the last couple of weeks, I did a similar analisys on BTC swaps and came to the conclusion there was only about 2300 BTC worth of risk at the time. Not much for a squeeze.

Great post!

So does the dramatic recent spike in active BTC swaps create the opportunity for a manipulator to profit by triggering a short squeeze?

EDIT: I guess you already answered my question, and the answer is yes, if I am following you correctly. (I'm not sure I know what you mean by '2300 BTC worth of risk'.) If so, then I am wondering: can we estimate how many $ it would take to trigger a squeeze, and estimate what the profit would be?

Since this kinda stuff couldn't be more obvious to even the most casual of observer, figure out the price on your own. Go on, chop chop  ::)

Lol agree

He's saying a sudden spike can trigger a short squeeze cause the BTC swap is high.  USD swap is low or normal so no fear of margin call.  This bear has to do your trading for you?  Sheesh.  I don't how accurate it is to analyze bitfinex.  Are they a big exchange.  Do they lead or follow?

Well, that 2300 BTC of risk was about 2 weeks ago, so the whole picture has changed now. It would be hard to do such analysis as figuring a Dollar amount and price target based solely on that with such crude charts. Since much of that large spike is toward the lows in price, the squeeze risk is fairly high with a sudden change in direction. Exact numbers I don't have right now and it's late for me, so I'm not going to figure that out right now, sorry. :)

By $x of risk, I mean the amount of funds that are somewhat in immediate danger. You have -12M at about the $500 mark. Since then we have +6M and -3M which leaves about $3M worth that are new since the $500 range which has been a while now. The new spike in USD swaps are (right now) a non issue because they won't get too red before the next bounce.

Think of swap as a loan w interest.  USD swap is longs borrow USD to buy BTC.  BTC swaps are shorts borrowing BTC to short sell.  Technically they are derivatives for hedging.  If you long dollars, you sell swaps and  collect interest to hedge moves against you.  If you are long BTC you lend BTC for interest to hedge if price moves against you.  

If the price moves too far against swap holders direction they are forced to close their positions (margin called).  The sudden tsunami of short covering causes a short squeeze.  A tsunami of long positions getting margin called creates a flash crash

I have only recently started trading on bitfinex so this may or may not be something new. One thing that I have noticed is that bitfinex is giving a warning to people to either deposit funds or close their position once their tradable balance is below zero, meaning they cannot increase their position. If this is not new then they are probably trying to encourage customers to close their loosing positions themselves in an effort to avoid them closing several customer's positions all at the time time, causing a cascading effect on the price

That is what is known as a margin call.  ;)
That is one step before forced liquidation.

Interesting. I was under the impression that you get a margin call only when your equity falls below the required maintenance margin level. I have always had well above the maintenance margin level.

Hmm, that's strange. I've never seen anything like that then. The only warning I've ever had was when I had a margin call. They have changed the way things work there 2 or 3 times since then so this may actually be something new.  :-\ Sorry, I guess I misunderstood what you were asking.

Well my interpretation was that they were trying to get people to use less leverage. There are just under 70k BTC worth of USD swaps outstanding on bitfinex which is just under the last 24 hours volume (which is already elevated). If they have to start liquidating positions on any kind of a large scale the price could potentially fall very far very fast