BTC Price Prediction Based on BITFINEX USD SWAPS technical/fundamental

[windjc]

I have been doing well using USD and BTC swaps as fundamental underlining indicators over the last year. Very well, actually.

Here is my first public prediction based on current market:

31.8 million is historical USD swap high on July 18, 2014.

Currently we are at just above 28 million. We haven't been at 28 million since July 1, 2014 when we were at a price of 654, the first major lower high of this bear market. If this isn't a HUGE red flag then I don't know what is.

Ironically we reached USD Swaps ATH two weeks later around July 18th AFTER dumping to 443 --> meaning at that time people loaded up because they thought we would recover. Longs DOUBLED DOWN. The market kept going down on its quick decline to 275.

Today, these swings aren't as extreme. Instead we are seeing the exact same process unfold, but in slow motion and buffered by shorts - in July 2014, shorts were only around 4-5k. Recently they have been ranging from 21-27k.

However, what we are seeing in todays market is EXACTLY the same thing that happened in July 2014 but in super slow motion.

On Feb. 24th there were 16 million longs. The average price that day was $238.  The price has fallen $10, while 12 million longs have opened. That is roughly 48k longs. Only 19 days since Feb 24th have we spent time below $228. 90 days we have spent above it.

More recently, we hit what at the time was a local USD Swaps high on April 9th. The average price was $236. We have since fallen $8 and longs have increased 1.6 million or around 6k btc.

The availability of cheap longs has also probably aided this phenomena. As more money sits out of bitcoin, more money is available to offer as swap. Rates are currently 45% of the cost they were at ATH.

If this slow trend since April 9th were to repeat itself, by July 10th we would be at 30 million longs and at a price around $220.

By August 10th we would be right below a USD Swaps ATH at 31.5 million longs and a price of $212 - right at critical support.

If this trend continues, I expect us to break $210 support and challenge for lower lows by late September/early October.

[Hunyadi]

USD swaps are also used for LTC, which had a nice pump lately. Interesting analysis, though.

[Cconvert2G36]

As much as I would wish for your analysis to be wrong this time... your reasoning is sound. The facts aren't pretty. Get ready to short a Gemini bounce. 2015 is not our year. 

[klee]

Are you short atm? Do you think it is safe to go short at this price?

I would like the price to go a bit higher (around 235) to feel safer opening a short. What do you think?

Nice analysis.

[windjc]

Are you short atm? Do you think it is safe to go short at this price?

I would like the price to go a bit higher (around 235) to feel safer opening a short. What do you think?

Nice analysis.

What's up Klee? Long time.

Yeah, I am short some. Not full.

Even with shorting, at least larger amounts, you need to have patience, imo.  Sure we could go to 235. Or 242. Or 249. Or 260. I'd be really surprised if we went higher than that.

However, I think its more likely we stay below 240 on our way down to 210-212 area. But, keep in mind, my OP was a prediction that had a 3-4 month time window. If our up movements continue to require USD swaps to rise, then its short lived imo.

[klee]

Are you short atm? Do you think it is safe to go short at this price?

I would like the price to go a bit higher (around 235) to feel safer opening a short. What do you think?

Nice analysis.

What's up Klee? Long time.

Yeah, I am short some. Not full.

Even with shorting, at least larger amounts, you need to have patience, imo.  Sure we could go to 235. Or 242. Or 249. Or 260. I'd be really surprised if we went higher than that.

However, I think its more likely we stay below 240 on our way down to 210-212 area. But, keep in mind, my OP was a prediction that had a 3-4 month time window. If our up movements continue to require USD swaps to rise, then its short lived imo.

Fine man, been a hell of a year! 

Agree on USD swaps, that's why I was very curious to see volume at GBTC & XBT ETN, though both are not high enough IMO to increase substantially the demand.

[TPTB_need_war]

I would like the price to go a bit higher (around 235) to feel safer opening a short. What do you think?

Unless you have a long-term horizon before your shorts expire, you are flirting with losing more of your BTC.

[Chef Ramsay]

I would like the price to go a bit higher (around 235) to feel safer opening a short. What do you think?

Unless you have a long-term short horizon, you are flirting with losing more of your BTC.

Yep, shorting at this point is suicide, just don't do it. Recalibrate it and go forward.

[klee]

I would like the price to go a bit higher (around 235) to feel safer opening a short. What do you think?

Unless you have a long-term short horizon, you are flirting with losing more of your BTC.

I have, I only trade a small amount (scalp) in this range. I sell whenever we reach the bearish resistance line (see link below) which is between 236 and 248 currently (short/medium term view).

For me to go bullish we need to close at least 1d above 250 (short term), 300(medium), 350(long term).

https://bitcointalk.org/index.php?topic=1064374.0

[gotmilk_]

I agree that USD swaps are really high and we could see a long squeeze.
But I think you forgot to look at the fact that Bitfinex user base went up in last year and this is why we see those big numbers in swaps (USD and BTC). This is why we didn't see massive short squeeze when shorts were at 33k and this is why there was no long squeeze (yet), despite longs are going crazy high (for current price).

Those numbers can get a lot higher (longs and shorts)... My guess.

[phoenix1]

I agree that USD swaps are really high and we could see a long squeeze.
But I think you forgot to look at the fact that Bitfinex user base went in last year and this is why we see those big numbers in swaps (USD and BTC). This is why we didn't see massive short squeeze when shorts were at 33k and this is why there was no long squeeze (yet), despite longs are going crazy high (for current price).

Those numbers can get a lot higher (longs and shorts)... My guess.

That's a fair comment - I assume you meant to put 'up' on the end there. Hadn't thought about that. The only problem is that we are seeing thinner order books, which does not make for a good combination.
Though I tend to agree, if we do start to trend down, that long swap number could get considerably higher. I think the leveraged longs are pretty attached to their positions and will need to be squeezed really hard to let go of them, and will likely double down first 

[JerryCurlzzz]

Very interesting. I take a look at swaps from time to time but I don't take them too seriously. For one thing, how do you account for, say, the increased volume and liquidity on Bitfinex now vs. last year?

[gotmilk_]

I agree that USD swaps are really high and we could see a long squeeze.
But I think you forgot to look at the fact that Bitfinex user base went in last year and this is why we see those big numbers in swaps (USD and BTC). This is why we didn't see massive short squeeze when shorts were at 33k and this is why there was no long squeeze (yet), despite longs are going crazy high (for current price).

Those numbers can get a lot higher (longs and shorts)... My guess.

That's a fair comment - I assume you meant to put 'up' on the end there. Hadn't thought about that. The only problem is that we are seeing thinner order books, which does not make for a good combination.
Though I tend to agree, if we do start to trend down, that long swap number could get considerably higher. I think the leveraged longs are pretty attached to their positions and will need to be squeezed really hard to let go of them, and will likely double down first 

Thanks, corrected  

Yeah, order books are getting really thin. A lot of money was lost during that down trend. MtGox and because of all those hacks lately I assume people took their btc and money off exchanges. With Circle, ATMs, btc payment adoption... there is no need for those who don't trade to use exchanges any more.

Yep, it will be hard to squeeze those positions especially because many of them can be well backed. Also Bitfinex has good algo for preventing flash crashes.

[phoenix1]

Yep, it will be hard to squeeze those positions especially because many of them can be well backed. Also Bitfinex has good algo for preventing flash crashes.

Kind of fits with OP's scenario of a long, drawn out grind, rather than a crash, *if* we go in that direction. Those positions have still gotta be funded, and if we hang around here for a couple more months, that is going to start to become a significant cost. I figure people mostly only borrow money on BFX when they don't have the free cash to do it, so it somewhat depends on how much more debt they want to take on ...

[gotmilk_]

Yep, it will be hard to squeeze those positions especially because many of them can be well backed. Also Bitfinex has good algo for preventing flash crashes.

Kind of fits with OP's scenario of a long, drawn out grind, rather than a crash, *if* we go in that direction. Those positions have still gotta be funded, and if we hang around here for a couple more months, that is going to start to become a significant cost. I figure people mostly only borrow money on BFX when they don't have the free cash to do it, so it somewhat depends on how much more debt they want to take on ...

Mhm. Will be interesting to see how it develops.

[TPTB_need_war]

I would like the price to go a bit higher (around 235) to feel safer opening a short. What do you think?

Unless you have a long-term short horizon, you are flirting with losing more of your BTC.

I have, I only trade a small amount (scalp) in this range. I sell whenever we reach the bearish resistance line (see link below) which is between 236 and 248 currently (short/medium term view).

For me to go bullish we need to close at least 1d above 250 (short term), 300(medium), 350(long term).

https://bitcointalk.org/index.php?topic=1064374.0

Surely you have more lucrative endeavors to pursue. I'd be dollar cost averaging out to fiat, waiting for the final bottom < $150 (perhaps < $100) later this year.