Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[TERA]

One can speculate that this rally was fueled by traders being able to take leveraged positions on bitfinex etc. But it is a double edged sword, and now they may use the same force to sell, or go short even.

[Walsoraj]

One can speculate that this rally was fueled by traders being able to take leveraged positions on bitfinex etc. But it is a double edged sword, and now they may use the same force to sell, or go short even.

humor me with some specific price predictions.

[TERA]

A retest of 175 and then finally catching on and reversing at the old july trendline now at 155. I don't really anticipate it going lower than that but it could be possible with enough momentum.

[TERA]

Let's say the snowballing momentum of margin position covers, panic, and shorting causes it to violate its appropriate trendline.  It might catch 130 (weekly ema) and if armageddon happens then  maybe 90 (how low weekly ema was violated in July).

[SheHadMANHands]

Let's say the snowballing momentum of margin position covers, panic, and shorting causes it to violate its appropriate trendline.  It might catch 130 (weekly ema) and if armageddon happens then  maybe 90 (how low weekly ema was violated in July).

Did you just learn about Bitfinex today?  People have been taking long and short positions on there for some time now.

One can speculate.. that this rally was fueled by traders being able to take leveraged positions on bitfinex etc. But it is a double edged sword, and now they may use the same force to sell, or go short even.

At least you admit off the bat that you're pulling this out of your ass..

I could say the exact same thing about people with short positions on Bitfinex, and land at the exact opposite conclusion.  Then we'd both be pulling something out of our ass.

[adamstgBit]

Let's say the snowballing momentum of margin position covers, panic, and shorting causes it to violate its appropriate trendline.  It might catch 130 (weekly ema) and if armageddon happens then  maybe 90 (how low weekly ema was violated in July).

Did you just learn about Bitfinex today?  People have been taking long and short positions on there for some time now.

in theory all the leveraged positions should lower volatility.

[notme]

Let's say the snowballing momentum of margin position covers, panic, and shorting causes it to violate its appropriate trendline.  It might catch 130 (weekly ema) and if armageddon happens then  maybe 90 (how low weekly ema was violated in July).

Did you just learn about Bitfinex today?  People have been taking long and short positions on there for some time now.

in theory all the leveraged positions should lower volatility.

until a squeeze happens and forced liquidation begins

[adamstgBit]

Let's say the snowballing momentum of margin position covers, panic, and shorting causes it to violate its appropriate trendline.  It might catch 130 (weekly ema) and if armageddon happens then  maybe 90 (how low weekly ema was violated in July).

Did you just learn about Bitfinex today?  People have been taking long and short positions on there for some time now.

in theory all the leveraged positions should lower volatility.

until a squeeze happens and forced liquidation begins

but thats just a good opt. to take a position so it should all balance out

[adamstgBit]

I would speculate that the rally was not fueled by poeple going long, but by shorts covering.

[theonewhowaskazu]

Let's say the snowballing momentum of margin position covers, panic, and shorting causes it to violate its appropriate trendline.  It might catch 130 (weekly ema) and if armageddon happens then  maybe 90 (how low weekly ema was violated in July).

Did you just learn about Bitfinex today?  People have been taking long and short positions on there for some time now.

in theory all the leveraged positions should lower volatility.

What.

Leveraged Positions should raise volatility, because they up directional volume in the short term, and then crash it when people are forced to cover.

Especially with high, fixed, interest rates, this can do a real number.

Currently, since USD interest rates are higher than BTC, leveraged positions have a higher potential to lower Bitcoin's price than to raise it. Also, there is no recourse (on the stock market, sometimes, if you "owe" after a margin call, brokers can go after you) for Bitcoin loans. If there were, something as inconsequential as the Silk Road crash could cause a gigantic problem for pretty much everyone involved. There was obviously lots of short pressure, explaining why BTC interest rates suddenly spiked, and the price would decline further, forming an "inverse bubble". But this is all short-based, and a short-based bubble explodes in a far more problematic manner than a long-based bubble. Somebody shorting at the bottom is probably stuck paying interest rates comparable to somebody longing BTC during the long-bubble, which was like 300%. Now, when the bubble bursts, the price went from sub-$100 (even without the a shorting-bubble, with a shorting-bubble it could potentially go much lower) all the way up to $132. Somebody shorting at the bottom is unlikely to cover. Now, Bitcoin is $200. Somebody who shorted 10 BTC at 90 would now owe about 9.6 BTC, and be responsible for paying about 28.8 BTC, just in interest, per year if he doesn't pay it off. A ton of people in such scenarios would be stuck bidding for the same Bitcoins, driving the price up even further, getting each other even further into debt. Now, the brokerage also lost Bitcoins in the short term, as it lent to the people who are currently struggling to pay back that debt. So the demand goes way up, driving the price up, making that debt even bigger.

This is effectively what happened in the great depression, only in reverse, where people were "shorting" the dollar, for stock, when the dollar was backed by gold. Whenever you borrow something deflationary to use leverage to trade a volatile instrument, especially if you're paying high interest rates, you're likely to get screwed badly, especially if that debt doesn't "evaporate", but is actually enforceable.

[ChartBuddy]

[windjc]

Let's say the snowballing momentum of margin position covers, panic, and shorting causes it to violate its appropriate trendline.  It might catch 130 (weekly ema) and if armageddon happens then  maybe 90 (how low weekly ema was violated in July).

Did you just learn about Bitfinex today?  People have been taking long and short positions on there for some time now.

in theory all the leveraged positions should lower volatility.

What.

Leveraged Positions should raise volatility, because they up directional volume in the short term, and then crash it when people are forced to cover.

Especially with high, fixed, interest rates, this can do a real number.

Currently, since USD interest rates are higher than BTC, leveraged positions have a higher potential to lower Bitcoin's price than to raise it. Also, there is no recourse (on the stock market, sometimes, if you "owe" after a margin call, brokers can go after you) for Bitcoin loans. If there were, something as inconsequential as the Silk Road crash could cause a gigantic problem for pretty much everyone involved. There was obviously lots of short pressure, explaining why BTC interest rates suddenly spiked, and the price would decline further, forming an "inverse bubble". But this is all short-based, and a short-based bubble explodes in a far more problematic manner than a long-based bubble. Somebody shorting at the bottom is probably stuck paying interest rates comparable to somebody longing BTC during the long-bubble, which was like 300%. Now, when the bubble bursts, the price went from sub-$100 (even without the a shorting-bubble, with a shorting-bubble it could potentially go much lower) all the way up to $132. Somebody shorting at the bottom is unlikely to cover. Now, Bitcoin is $200. Somebody who shorted 10 BTC at 90 would now owe about 9.6 BTC, and be responsible for paying about 28.8 BTC, just in interest, per year if he doesn't pay it off. A ton of people in such scenarios would be stuck bidding for the same Bitcoins, driving the price up even further, getting each other even further into debt. Now, the brokerage also lost Bitcoins in the short term, as it lent to the people who are currently struggling to pay back that debt. So the demand goes way up, driving the price up, making that debt even bigger.

This is effectively what happened in the great depression, only in reverse, where people were "shorting" the dollar, for stock, when the dollar was backed by gold. Whenever you borrow something deflationary to use leverage to trade a volatile instrument, especially if you're paying high interest rates, you're likely to get screwed badly, especially if that debt doesn't "evaporate", but is actually enforceable.

Except that there is a thing called a margin call. And in Bitfinex case, individuals are the lenders not the brokerage exchange.

And if you did your history lesson you would know that when Bitfinex first opened (Bitfinex 1.0 not the current 2.0 version) they did so right before the April crash. The market crashed over 82% and the main exchange Gox went down.  Even so, the lenders lost only the equivalent of 9% of their loan equity. And that money was paid back by Bitfinex.  

So, I figure if the market crashes 82% and lenders lose 9%, which is the equivalent of about what they make there in a month interest, then these "the sky can fall" predictions are pretty baseless.

Of course, if BTC goes to 0 then everyone loses. But then that irrelevant and obvious anyway.

[theonewhowaskazu]

Let's say the snowballing momentum of margin position covers, panic, and shorting causes it to violate its appropriate trendline.  It might catch 130 (weekly ema) and if armageddon happens then  maybe 90 (how low weekly ema was violated in July).

Did you just learn about Bitfinex today?  People have been taking long and short positions on there for some time now.

in theory all the leveraged positions should lower volatility.

What.

Leveraged Positions should raise volatility, because they up directional volume in the short term, and then crash it when people are forced to cover.

Especially with high, fixed, interest rates, this can do a real number.

Currently, since USD interest rates are higher than BTC, leveraged positions have a higher potential to lower Bitcoin's price than to raise it. Also, there is no recourse (on the stock market, sometimes, if you "owe" after a margin call, brokers can go after you) for Bitcoin loans. If there were, something as inconsequential as the Silk Road crash could cause a gigantic problem for pretty much everyone involved. There was obviously lots of short pressure, explaining why BTC interest rates suddenly spiked, and the price would decline further, forming an "inverse bubble". But this is all short-based, and a short-based bubble explodes in a far more problematic manner than a long-based bubble. Somebody shorting at the bottom is probably stuck paying interest rates comparable to somebody longing BTC during the long-bubble, which was like 300%. Now, when the bubble bursts, the price went from sub-$100 (even without the a shorting-bubble, with a shorting-bubble it could potentially go much lower) all the way up to $132. Somebody shorting at the bottom is unlikely to cover. Now, Bitcoin is $200. Somebody who shorted 10 BTC at 90 would now owe about 9.6 BTC, and be responsible for paying about 28.8 BTC, just in interest, per year if he doesn't pay it off. A ton of people in such scenarios would be stuck bidding for the same Bitcoins, driving the price up even further, getting each other even further into debt. Now, the brokerage also lost Bitcoins in the short term, as it lent to the people who are currently struggling to pay back that debt. So the demand goes way up, driving the price up, making that debt even bigger.

This is effectively what happened in the great depression, only in reverse, where people were "shorting" the dollar, for stock, when the dollar was backed by gold. Whenever you borrow something deflationary to use leverage to trade a volatile instrument, especially if you're paying high interest rates, you're likely to get screwed badly, especially if that debt doesn't "evaporate", but is actually enforceable.

Except that there is a thing called a margin call. And in Bitfinex case, individuals are the lenders not the brokerage exchange.

And if you did your history lesson you would know that when Bitfinex first opened (Bitfinex 1.0 not the current 2.0 version) they did so right before the April crash. The market crashed over 82% and the main exchange Gox went down.  Even so, the lenders lost only the equivalent of 9% of their loan equity. And that money was paid back by Bitfinex.  

So, I figure if the market crashes 82% and lenders lose 9%, which is the equivalent of about what they make there in a month interest, then these "the sky can fall" predictions are pretty baseless.

First off, the only reason why the lenders lost only 9% is because there aren't that many borrowers.

Consider if there were a ton of borrowers, like the majority of Bitcoin speculators decided to trade on x5 leverage. Suddenly, bubbles form x5 bigger and when they crash, a huge amount of selling occurs due to margin calls, triggering even more crashing. Eventually, the margin calls can't cover the principal any more, and the person is in debt. In Bitfinex's case, the lenders would absorb that loss, and although it would be a pretty sad thing to happen, it wouldn't be the end of the world. If a brokerage came that actually could enforce that debt, however, then you get stuck into a spiral where the people at the wrong end of the speculation end up owing a sum of Bitcoin or USD that simply doesn't exist on the exchanges, driving the price up and/or down continuously until finally a default occurs.

[windjc]

Let's say the snowballing momentum of margin position covers, panic, and shorting causes it to violate its appropriate trendline.  It might catch 130 (weekly ema) and if armageddon happens then  maybe 90 (how low weekly ema was violated in July).

Did you just learn about Bitfinex today?  People have been taking long and short positions on there for some time now.

in theory all the leveraged positions should lower volatility.

What.

Leveraged Positions should raise volatility, because they up directional volume in the short term, and then crash it when people are forced to cover.

Especially with high, fixed, interest rates, this can do a real number.

Currently, since USD interest rates are higher than BTC, leveraged positions have a higher potential to lower Bitcoin's price than to raise it. Also, there is no recourse (on the stock market, sometimes, if you "owe" after a margin call, brokers can go after you) for Bitcoin loans. If there were, something as inconsequential as the Silk Road crash could cause a gigantic problem for pretty much everyone involved. There was obviously lots of short pressure, explaining why BTC interest rates suddenly spiked, and the price would decline further, forming an "inverse bubble". But this is all short-based, and a short-based bubble explodes in a far more problematic manner than a long-based bubble. Somebody shorting at the bottom is probably stuck paying interest rates comparable to somebody longing BTC during the long-bubble, which was like 300%. Now, when the bubble bursts, the price went from sub-$100 (even without the a shorting-bubble, with a shorting-bubble it could potentially go much lower) all the way up to $132. Somebody shorting at the bottom is unlikely to cover. Now, Bitcoin is $200. Somebody who shorted 10 BTC at 90 would now owe about 9.6 BTC, and be responsible for paying about 28.8 BTC, just in interest, per year if he doesn't pay it off. A ton of people in such scenarios would be stuck bidding for the same Bitcoins, driving the price up even further, getting each other even further into debt. Now, the brokerage also lost Bitcoins in the short term, as it lent to the people who are currently struggling to pay back that debt. So the demand goes way up, driving the price up, making that debt even bigger.

This is effectively what happened in the great depression, only in reverse, where people were "shorting" the dollar, for stock, when the dollar was backed by gold. Whenever you borrow something deflationary to use leverage to trade a volatile instrument, especially if you're paying high interest rates, you're likely to get screwed badly, especially if that debt doesn't "evaporate", but is actually enforceable.

Except that there is a thing called a margin call. And in Bitfinex case, individuals are the lenders not the brokerage exchange.

And if you did your history lesson you would know that when Bitfinex first opened (Bitfinex 1.0 not the current 2.0 version) they did so right before the April crash. The market crashed over 82% and the main exchange Gox went down.  Even so, the lenders lost only the equivalent of 9% of their loan equity. And that money was paid back by Bitfinex.  

So, I figure if the market crashes 82% and lenders lose 9%, which is the equivalent of about what they make there in a month interest, then these "the sky can fall" predictions are pretty baseless.

First off, the only reason why the lenders lost only 9% is because there aren't that many borrowers.

Consider if there were a ton of borrowers, like the majority of Bitcoin speculators decided to trade on x5 leverage. Suddenly, bubbles form x5 bigger and when they crash, a huge amount of selling occurs due to margin calls, triggering even more crashing. Eventually, the margin calls can't cover the principal any more, and the person is in debt. In Bitfinex's case, the lenders would absorb that loss, and although it would be a pretty sad thing to happen, it wouldn't be the end of the world. If a brokerage came that actually could enforce that debt, however, then you get stuck into a spiral where the people at the wrong end of the speculation end up owing a sum of Bitcoin or USD that simply doesn't exist on the exchanges, driving the price up and/or down continuously until finally a default occurs.

Well, consider if the sun collides with the moon. Why are we considering something that is never going to happen. The case you are making is some hypothetical extreme. We are getting more parity in exchanges and will continue to do so. Only a few will be traders and only a few of them will use margin.

And why would a brokerage come out and take some huge risk on margin giveaways? Then the brokerage defaults if something goes bad. Again, thats why there are margin calls.

[ChartBuddy]

[byronbb]

The market has been moved by $5 to $10 million dollar purchases and these bucket shops have no where near that kind of liquidity.  This isn't like the hilarious bitcoinica days.

[windjc]

The market has been moved by $5 to $10 million dollar purchases and these bucket shops have no where near that kind of liquidity.  This isn't like the hilarious bitcoinica days.

Let's see. A bucket shop is: "an unauthorized office for speculating in stocks or currency using the funds of unwitting investors."

So you are saying none of these exchanges are authorized? Not authorized by whom?

And you are saying these exchanges are speculating in currency using the funds of unwitting investors? LOL. Is this seriously what you think?

Ok.

I guess you can wait and do business with Circle once they acquire their registration in all 47 necessary states to go along with their FINCEN compliance.

The rest of us will just unwittingly let these exchanges use our funds.

Or maybe (after reading some of your other posts) I misunderstood you? Were you making some other point?

[chriswilmer]

I have a theory. There is a big player slowly accumulating bitcoins across all of the exchanges. Basically there is a very big, invisible bid wall.

[MAbtc]

Quiet for the most part tonight... little dip under $210.

[ChartBuddy]