Behind the Violent Rise of Bitcoin

Abstract: Bitfinex has itself issued the USDT, then uses its own USDT to buy BTC. It will raise the Bitcoin price in a short period of time. At the same time, the open positions on the platform will all burst into positions, so as to obtain a large number of BTCs. The USDT then recovered most of the additional issuances and made a large surplus of BTC. This game can be played again at intervals.

Behind the violent rise in bitcoin prices is whether the bull market restarts or seeks to catch the disk man?

On the evening of April 12, Bitcoin soared in a short span of one hour. Prices rose from a low of 6,800 U.S. dollars to a maximum of 8,100 U.S. dollars, and rose by 20% during the day. Under the leadership of Bitcoin, other virtual currencies also ushered in a strong rebound, with single currency gains even exceeding 50%.

Bitcoin official website data shows that as of press time, Bitcoin price was 7976.6 U.S. dollars, the intraday gain of 2.07%.

For virtual currency investors, the more important question is whether this round of currency price rise is a bull market restart or a lure to the high position of the speculators.

Nick Kirk, director of data for CypherCapital, said, “Today, the buying of Bitcoin has increased, and many short positions have been forced to close out, which is one of the reasons for this increase. This sharp rebound is more likely to be a response to the release of earlier regulatory pressures. The recent price of Bitcoin has been declining, but the technology development of the new generation of Bitcoin continues. Bitcoin prices will return to normal sooner or later."

Specifically, with the increase in the number of participants in the digital currency market and the continuous evolution of infrastructure, many investors choose to use leveraged trading. Currently, many domestic digital asset trading platforms have introduced leveraged contract transactions, with a maximum leverage of 20 times. Leveraged trader accounts are very risky. Accounts that are 10 times leveraged may be forced to close their positions with fluctuations of 8 to 9%, and 20 times leveraged accounts will not exceed 5%.

If it is a short-leverage + long-spot operation, when the price rises quickly, you may decide to reduce the losses and make up for the shorts by buying long positions and pushing up prices.

It is particularly worth noting that this pull-up from the time difference between the exchanges in terms of minutes, starting from Bitfinex pull, and then spread by arbitrage traders quickly spread to other platforms.

Bitfinex trading platform market shows that on April 12th, Bitcoin soared more than 1,000 U.S. dollars in the intraday trading volume, the volume of more than 25,000, according to the market value of 7,700 U.S. dollars, the market turnover of nearly 200 million US dollars. Of these, Bitfinex accounted for nearly 15,000 transactions, accounting for 60% of the total volume.

According to a professional investor in the currency circle, a reporter from the Securities Times and Venture Capital Exchange explained that since Bitfinex has itself issued the USDT and then used its own USDT to buy BTC, the Bitcoin price will be pulled up in a short period of time while all the empty positions on the platform are available. The bankruptcy position was used to obtain a large number of BTCs, and then BTC exchanged a large amount of USDT to increase the number of additional issuances to recover most of the additional issuances, and a large surplus of BTCs. This game could be played once again at a time.

Prior to March 22, Tether’s official just issued 300 million USDTs, and Tether is actually a “shadow company” of Bitfinex. The executives are all the same people. Most of Tether’s new USDTs will be traded on the Bitfinex platform first, and Bitfinex will not even treat USDT and U.S. dollar transactions differently.

If this is a big-man-operated burst, what they are waiting for now is that the leeks are swarming in, and then they cash in high places.

But Pantera Capital Management, one of the world's largest digital currency hedge funds, said Bitcoin has bottomed out. The 6,500 U.S. dollar is the low point for Bitcoin's bear market. Bitcoin will be above this price for most of this year and may even exceed the record high of 20,000 U.S. dollars last year.

Fundstrat founder Tom Lee also expressed confidence in Bitcoin. He believes that the current Bitcoin P/B ratio and other indicators are almost the same as the end of 2014 bear market, and has formed an important technical correction. Based on this, he stated that the value of Bitcoin may rise more than three times this year and rose to 25,000 U.S. dollars at the end of this year.

Although Bitcoin currently has a strong rise, it is still in a downtrend channel and has not yet been effectively broken. It remains to be seen whether the virtual currency market has actually reversed. Investors should always be vigilant and pay attention to position management.

Author: Marko Vidrih