it will go back up to 5.80, then head lower.

PONGED when it should have PINGED!

This is no flash crash. The price is not recovering and the asks are filling in.

Consensus opinion so for still seems to be a lot of denial...


I don't think this sell off marks panic, it was simply an unravelling of the leveraged longs. I think a bunch of them will have been washed out, and i think the rest will be hesitant about jumping straight back in.

Pessimism has yet to grip these boards, and only then will the true panic selloff begin and we can start to think about finding a bottom.

Some of my higher price orders in the 5.xx range have been filled (don't want to be totally committed to my plan and miss out an picking up a few coins in case we simply spike back up) so my long position is starting to creep up.

The bigger orders going down 4,3,2 range still stand, and the longer this goes on the more likely it seems they get filled.

I maintain my belief that we retest $2.20, any lower and I'll need more capital

Yeah until that time it shows as unrealised P/L.

The stuff in your history is just individual trades. Your aggregate position is just where you are at right now. The only salient factors being What your respective net dollar position (cost basis) and BTC position is.

Your base price is then cost basis/btc

Your unrealised P/L is: ([bid|ask] - cost basis) * btc

Yea if there is a problem, I'd rather he was spunking about on some shitty forum, rather than fixing it...

You can have as big or small a position as you like (with respect to your margin balance, which is in turn based on your chosen leverage).

As you add or remove to your position, you just see the aggregate position to date. Your P/L is only realised when you close out a position fully.

If you reduce a position then your base price changes to reflect this. It's just the way margin trading is implemented on there.

Eventually trade frequency increases such that you can do order matching in real time, so you never even have to go to market for some trades - thus earning you 100% of your spread.

I suspect the next phaseis to have enough bitcoin/USD & trade volume, that you no longer need to hedge against gox and instead become another exchange. Well played mr z.

Hmm. I forgot toe say that the $10 and 10BTC are effectively on loan!

So to continue.... Charlie deposits $10. Buys 100BTC.

I have $20 and 210 BTC. (I owe $20 and 10BTC, I am owed spread on all trades to date)

Price moves against Alice, she is forced to liquidate. My debt to her offset by her realised loss.

I have $10 and 210 BTC (I owe $10 and 10BTC, I am still owed spread on Bob and Charlies trades). So I am running $10 profit.

Derek comes along and deposits $10 and wants to go long at 10:1. He gets "no reserve".

I am bitcoinica, I have $110USD and 110BTC real.

When Alice buys I have to spend $100 to get 100 BTC. I have $10 and 210BTC.
When Bob goes short, I sell 100BTC for $100. I Have $110 and 110 BTC again.

I also have an outstanding credits to Bob and Alice for the spread I charged when I 'executed' their trades.

Charlie can open a position either way (up to the value of the reserves)

1. Why do you want/need that information?
2. What are the ways in which this information can be abused?

The benefits of 1 need to outweigh the risk of 2.

I'm not very imaginative but I get a feeling that if this information was public, that someone more imaginative than me, with bigger pockets, might be able to use that to exploit some facet of bitcoinica's model. You could probably figure out exactly how leveraged up people are, and exactly how deep you need to go to force a squeeze.

Lets not give the alleged manipulator(s) even more ways to screw everyone else.

Well taking that into consideration maybe we are leaning towards 30k bitcoin bought with 200k USD. (6.66 a bitcoin).

I thought more on the 'zhouting price' effect, based on the effective net leverage. Instead of looking for some singular value, liquidation will happen across the range (maybe a normal distribution around what the zhoutong price would be at 3 or 4 times leverage - off the top of my head probably around 4-4.50). Smaller moves will take in a few zhoutingings, but it will take bigger move to kick off a snowball effect and a true 'long leverage squeeze'.

The model is constantly moving though, as people's positions readjust with smaller moves. I think there is still too much optimism around here for any spike down that is big enough to trigger this. It all depends on whether the buying pressure will continue to wane. I still think we are headed down (I reconsidered my FOMO and got out of my gox long position for net break even). Will have to rely on the coins in my wallet as consolation of if we suddenly take off it looks like a down leg to me and the forums reek of denial...

I think this is the most insightful post I have read for a while. Everyone is seeing the blinking asterisk of bitcoinica and concluding that there is simply huge buying pressure.

However, the blinking eye (i.e. no reserve) also means that a lot of people have bought, and that there has to be some kind of leveraged component to that (else their would be no blinking eye).

It all boils down to how leveraged up this net long position in bitcoinica is. Zhou says 'normally 6 figures' for USD holdings, so they are holding between 100k and 999k of bitcoinica USDs. These are probably not all in bitcoin, as some people are leveraged. (e.g. if someone deposits $1 then they could potentially use up to $10 of bitcoinca's USD holding) so if they only have $100k USD and that was all leveraged 10:1 then that would only be ~1600BTC ($10k/worth). Conversely if they held 999k are all in bitcoin with no leverage that would be around 160k - but wholly unleveraged there would be no 'liquidation squeeze' to speak of.

The reality then is that there are something between 1600 - 160k bit coins leveraged at anything up to x10.  Zhou has mentioned they have 'normally 5 figures' of bitcoin. This puts the real figure somewhere between 10k-100k bitcoin again potentially with leverage up to 10x. Generally speaking the higher the total number of bit coins they have on hand the lower the net leverage is likely to be as the greater number of bit coins requires a greater number of 'real' dollars to back.

The other factor to then consider is what the internal hedging position is. However many net BTC short the shorts are can be internally hedged against the longs. So the USD holdings only cover the discrepancy between internal short and long positions. Bitcoinica claims to be 42% hedged, if that means the other 58% is net zero internally. Then (for the sake of simplicity we'll round to 50%) there is double the above figure (10-100k BTC) long right now, and the same again short.

Now I'm not sure what conclusions people will draw from this, because every day I read bits of information here and there, and then find myself amazed at how commentary extrapolates this info into some uber-bullish statement.

Speculating on how many BTC bitcoinca has at what leverage is the name of the game, plump for the middle holdings ($500k) & leverage(5:1), take a $6 purchase price and your zhoutong price as about $5. 250k in at $4 at 2.5:1 and your zhoutong price is around $2.56 for . However if you take the irrationally exuberant position of being leveraged up say 10:1 on $500k at an average purchase price of $6 your average shouting price is ~$5.64 and you have around 83k BTC to liquidate.

As you can see a marketplace that has been in the 'bitcoin is going to the moon' mindset, that was suddenly faced with declining price could quite possibly be leveraged up enough to cause a spectacular downward spike as all the leveraged longs get liquidated. 80k BTC selloff into an already bearish market, with shorts piling on. This is exactly how it is possible to test $2 again. As a long term bull, temporary bear, I fully expect a flaming so knock yourself out permabulls!

this 'statistic' never fails to disappoint. It's classic ignorance of wtf is really going on in the world.

Pop quiz how many people on this earth live on < $10 a day?

A source from 2005 puts that figure at around 80%, lets assume that nothing has changed and the richer haven't got any richer 

So that 5.1 billion people who probably aren't going to be spending any of that $10 on accumulating bitcoin.

At what point does someone have enough disposable income to start saving/investing/speculating? That's the real question.

Lets assume everyone on minimum wage is investing. so say $15,000pa income. about 12.5% of the world earn that or more. That would put you viable candidates for bitcoin at 875m rather than 7b. Quite a difference.

I would go so far as to say that $15k isn't really enough. You are probably going to need to be earning twice that which makes your sample about 500m. That's more like 4 BTC a person, its still not a lot, but at least its a bit more realistic than 1% of *everyone*.

Now to play devils advocate...

So lets assume that each of the people invested only have 1% of their total NW invested. Given that these people own most of the money in the world between them. Assume 800billion (real) dollars exist, so 8bn of that in bitcoin gives us ~$380 a coin.

If BTC was to replace 1% of the $40 trillion well thats more like $19,000 per BTC.

Right now though there is huge, and incalculable risk that the whole marketplace could become worthless overnight, so maybe $6 is about right. Who knows.

You know what, if there was ever any doubt about zhoutongs age, it has to be a fact!

I remember when I was 17, and someone was like "oh you need your thing to do X" and you could just sit down and bang out code and have it done in hours. It's like your brain just ebbed code and your fingers just did the best they could to keep up!

Unfortunately I never had the fortune that my hero coding actually turned into much cold hard cash (still, what's a coder gonna do otherwise.. not code!? you just keep doing it cos you love coding!)

Oh yeah, course I am jealous, but I don't begrudge you anything Mr Z. I love the work you guys are doing.

I'm sure in 20 years time, as you pump out the code in a much more sedentary manner (or more likely stroll along a sunny beach) you'll look back on these good times and think, how the hell did I pull that off.

Those all-nighters just get harder and harder!

Yeah, no zhoutonging to worry about there! worst case scenario i've upped my long term core holding at a slightly higher price.

I still got my bids lined up on bitcoinica in case of any dip

argh I cannot resist... FOMO'd

100% long on gox...

MACD crossover incoming...



RSI still flirting with 70.

Still, we could quite easily punch through $7.20 at any second, and I think that will result in a serious squeeze.

I wouldn't like to call this one. I'll stay on the sidelines for now.

Cheat!? I think the PC term is arbitrage opportunities