Oh well, basically everyone who has bitcoins is currently sitting on profits. And a lot of people are starring at their wallets and cannot believe how wealthy they have become or becoming....this cannot go on forever.
We should not forget that there are currently 3.5 Mio USD on loan at Bitfinex at high interest rates (80% p.a.) for leveraged bitcoin long positions. This all goes well as long as prices go up, but once we reach stability or a drop a lot of coins will come to the market. Given that many people try to react quickly to get out of their positions, creating margin calls could create a flashcrash to levels no one would expect.
In my eyes the crash will come, the only question is when and from which levels.
@$500/BTC $3.5 million is only 7k coins. Sure that is significant, but it isn't enough to clear the bids down to $450.
1. Bitfinex prices are linked to the Bitstamp orderbook (465 USD)... much lower depth...
2. Those loans were not taken out at 465, but at much lower levels.
3. People use their coins as margin and might be sold as well...
Let´s guess it is 10000-12000 coins...
Only these coins
could bring down the bitstamp and bitfinex price to USD 300...
1. Bitfinex prices are linked to the Bitfinex order book, which has Bitstamp orders, plus in house orders. 7000 BTC would indeed take us to $370, based on order depth alone, but arbitrage opportunities will dampen that quite a bit unless it happens very quickly.
2. Right, so there is quite some headroom before they are forced out and my observations are that Bitfinex longs decrease when there are down drafts. In other words, they are using stop losses.
3. Sure
12000 all at once would take Bitfinex to $280. 10000 would take it to $320. But, the headroom, stop losses, and arbitrage will keep us from seeing bitcoinica era volatility caused by Bitfinex. It may happen due to other forces, but Bitfinex doesn't have enough leverage and the exchange market is too widely distributed for Bitfinex to control price.
