This Bitfinex Credit Bubble cannot end well

[inca]

This price rise since the crash looks over to me. I'm guessing there will be another crash to lower lows soon.

guessing is the correct term.

there are always new lower lows... until there aren't.

it's anyones guess, I guess.

True words molecular. The change from a bear and bull market happens when traders guess down a few times but the market moves up or fails to drop instead. Eventually more and more traders guess up then moon.

[HarmonLi]

I'd be more comfortable if short covering was more dynamic, if short were squeezed
But it seems buying pressure is very limited

short squeeze will not happen at these level imo.

we need to be patient

Yes, it seems people are expecting a short squeeze as the cause for a great rise...  Not really how it works.

I think a slow and gradual short squeeze may happen. People shorting all the way down seldomly encountered moments where shorting was a bad decision. They will continue to do so. Those shorts will be margin called at some point. Also people who realize they're now wrong shorting will close their position and buy their coins back.

[minerpumpkin]

I actually don't really want to see that many short squeezes. I'm fed up by all those rapid jumps up, only to go down again and end up at even lower levels. I'm totally fine with a constant and sustainable grow, actually! Then again, margin-calling some bears is a very good thought

[manselr]

So what does this mean? Once people start paying back the loans there will be an cascade of sells = downward pressure on the market?

[molecular]

So what does this mean? Once people start paying back the loans there will be an cascade of sells = downward pressure on the market?

That would be a long squeeze. In a short squeeze there are cascading buys of the asset (BTC) and the loans closing are in BTC, not USD.

The reason is arbitrary, but of course is in effect a rising price. That forces shorts to close in a cascading effect.

DEFINITION OF 'SHORT SQUEEZE'
A situation in which a heavily shorted stock or commodity moves sharply higher, forcing more short sellers to close out their short positions and adding to the upward pressure on the stock. A short squeeze implies that short sellers are being squeezed out of their short positions, usually at a loss. A short squeeze is generally triggered by a positive development that suggests the stock may be embarking on a turnaround.

Now, of course many shorts will close voluntarily before they are forced (we already saw this to an extent).

If no short was forced to close and yet many shorts closed voluntarily during a juicy rally, would we still call it a short squeeze? I'm not sure.

[Hunyadi]

We have lots of shorts once again
BTC 24,405.44 BTC   

[molecular]

We have lots of shorts once again
BTC 24,405.44 BTC   

That's actually good news

[Hfertig]

don't forget the longs which are about 3 times the amount. In addition there are lots of people leveraged by loans, mortages and creditcards in order to go long Bitcoin. I am not sure about any facility where you can borrow bitcoins in order to short them (apart from some btc exchanges). A long squeeze seems much more likely than a short one. Especcially with a lot of people believing that we have seen the bottom. We do know that an underlying is always moving into the direction of most pain.

[molecular]

ok, it's realitively good news.

[billyjoeallen]

What about the fiat credit bubble that's been going on for decades? How do you think that's gonna end?

[readysalted89]

What about the fiat credit bubble that's been going on for decades? How do you think that's gonna end?

I'm no economic expert but I heard most countries are heavily in debt. Exactly who do they owe the money to and do they just print more money if they can't pay? Whoever they borrow the money off must have a shitload of cash.

[ElectricMucus]

What about the fiat credit bubble that's been going on for decades? How do you think that's gonna end?

It's when THEY come for your Bitcoins.

[molecular]

What about the fiat credit bubble that's been going on for decades? How do you think that's gonna end?

nuclear winter

[molecular]

What about the fiat credit bubble that's been going on for decades? How do you think that's gonna end?

I'm no economic expert but I heard most countries are heavily in debt. Exactly who do they owe the money to and do they just print more money if they can't pay? Whoever they borrow the money off must have a shitload of cash.

Dude, debt IS money.

Fiat money is CREATED when a bank issues credit . So yes, they have an infinite shitload of cash.

I know it's hard to grasp, but it's well worth understanding this.

[Hunyadi]

We have lots of shorts once again
BTC 24,405.44 BTC   

That's actually good news

That's what I was thinking... perhaps, there is more to come.

[Erdogan]

What about the fiat credit bubble that's been going on for decades? How do you think that's gonna end?

I'm no economic expert but I heard most countries are heavily in debt. Exactly who do they owe the money to and do they just print more money if they can't pay? Whoever they borrow the money off must have a shitload of cash.

They do owe money to other countries' governments and private persons. If you aggregate the net debt of all countries, you find the debt that is owed to individuals.

If they pay, the money goes to the lender and the debt money is extinguished. If they can not pay, the money is lost for the lender, but stays with the loaner (or whoever got them from the loaner). Again the debt part is extinguished. There are two parties to each loan (unless there are errors in the books, which is quite possible, but I don't think that have practical consequences overall).

Volatility may harm the lender (who might be you through a pension fund) if there is a default, the loaner if the loan is cancelled, and everybody as the money volume suddenly contracts.

[RoadTrain]

Another ATH in BTC swaps volume, according to BFXData. Kinda scary to be short atm. USD swaps are on the rise as well though.

[Morecoin Freeman]

Another ATH in BTC swaps volume, according to BFXData. Kinda scary to be short atm. USD swaps are on the rise as well though.

Isn't it the other way around actually (scary to be long)? Since everyone is already fully invested the momentum will stall?

[RoadTrain]

Another ATH in BTC swaps volume, according to BFXData. Kinda scary to be short atm. USD swaps are on the rise as well though.

Isn't it the other way around actually (scary to be long)? Since everyone is already fully invested the momentum will stall?

I actually think either is scary When volatility comes there will be blood, no matter which way the price goes.

[Morecoin Freeman]

I agree! With bitcoin trading it is always scary.