This Bitfinex Credit Bubble cannot end well

[Newbie1022]

It's too bad that they'll rollback trades to a certain point and freeze trading if a crash does occur... I've got student loans that need paying. =D

[minerpumpkin]

It's too bad that they'll rollback trades to a certain point and freeze trading if a crash does occur... I've got student loans that need paying. =D

Would you rather want the whole market to crash or all positions being completely screwed up at Finex, at least? I guess it's their only option.

[BitcoinMillionaire]

Leveraged trading, huh? Ummm... Maybe I should long all my BTC at the start of the next bubble and try a 10:1 leverage. I'll then be a billionaire!! 

[BitBits]

Leveraged trading, huh? Ummm... Maybe I should long all my BTC at the start of the next bubble and try a 10:1 leverage. I'll then be a billionaire!! 

Hope you do not expect to sound sarcastic or something...

[Newbie1022]

It's too bad that they'll rollback trades to a certain point and freeze trading if a crash does occur... I've got student loans that need paying. =D

Would you rather want the whole market to crash or all positions being completely screwed up at Finex, at least? I guess it's their only option.

I don't want anything bad to happen to the other traders or Bitcoin, broadly. At the same time, I've got student loans to pay off (this is a personal debate with the good angel on one shoulder and the bad angel on the other).

[Coinfan]

It seems that Bifinex's measures to limit the swaps volume might not be effective in time. The amount only went down for 1 or 2 million. This is looking bad to the long traders and many prefer to sink with the ship than to accept losses.

A crash at Bitfinex is becoming a serious possibility. Just in case, better prepare your bid offers. But don't be greedy or your trades will be reversed.

[Newbie1022]

It seems that Bifinex's measures to limit the swaps volume might not be effective in time. The amount only went down for 1 or 2 million. This is looking bad to the long traders and many prefer to sink with the ship than to accept losses.

A crash at Bitfinex is becoming a serious possibility. Just in case, better prepare your bid offers. But don't be greedy or your trades will be reversed.

What is this greedy you speak of (what is kind of greedy v. comically greedy no chance in hell)? Should people play BTC-e since it seems to go lockstep despite not having the leverage problem because of a thin order book and they have a reputation of not reversing trades? General thoughts?

[Coinfan]

At about 450 (math based on a buy price of about 630-640, taking in account the drop in value of the borrowed btcs and also of the btcs offered as collateral), most long traders will be liquidated. If Bitfinex doesn't stop trading before 450, the price will end below 1usd and they will have to reverse trades.

But the price probably will go to 450 faster on Bitfinex than on the chinese exchanges, since many long traders won't be willing to risk the liquidation and soon or later will start dumping. And some will be liquidated before 450.

Yes, betting in BTC-e is a good choice also.

[Newbie1022]

At about 450 (math based on a buy price of about 630-640, taking in account the drop in value of the borrowed btcs and also of the btcs offered as collateral), most long traders will be liquidated. If Bitfinex doesn't stop trading before 450, the price will end below 1usd and they will have to reverse trades.

But the price probably will go to 450 faster on Bitfinex than on the chinese exchanges, since many long traders won't be willing to risk the liquidation and soon or later will start dumping. And some will be liquidated before 450.

Yes, betting in BTC-e is a good choice also.

Thanks for the thoughts!!

[Coinfan]

You are welcome.

To justify the 450 usds per bitcoin:

Most long traders are still using a 2.5:1 leverage, since the new limits don't affect current positions.

Therefore, someone with 100 btcs could borrow USDs that allowed him to buy about more 250 btcs. So, if he bought them at about 630, he borrowed 157,500 USDs (250x630).

He is going to be liquidated when he is about to lose all his own 100 btcs and the value of the 350 btcs he has (the original 100+250 borrowed) only can pay the 157,500 USDs borrowed.

So, 157,500 / 350= 450. 450 will be the last price at which his 350 btcs can still pay the borrowed USDs. I never did the math based on the liquidation price they show in order to figure out at what exact value the Bitfinex liquidation happens. Probably, it will liquidate the position before the 450.

Anyone feel free to correct me.

[WillyBTC]

IIRC, the margin requirement is 13% (or something like that). So it will liquidate you when the ticker indicates you've only got 13% over what you need to cover. This is to cover lack of liquidity, I assume.

[fred1111]

It seems that Bifinex's measures to limit the swaps volume might not be effective in time. The amount only went down for 1 or 2 million. This is looking bad to the long traders and many prefer to sink with the ship than to accept losses.

A crash at Bitfinex is becoming a serious possibility. Just in case, better prepare your bid offers. But don't be greedy or your trades will be reversed.

What is this greedy you speak of (what is kind of greedy v. comically greedy no chance in hell)? Should people play BTC-e since it seems to go lockstep despite not having the leverage problem because of a thin order book and they have a reputation of not reversing trades? General thoughts?

BTC-E is used by Plus500, so it is probably also affected by leveraged trading gambling.

[isov]

Has this last drop squeezed any longs for now? How low do you think it should go that we could say longs are properly squeezed?

[shockinglyugly]

IIRC, the margin requirement is 13% (or something like that). So it will liquidate you when the ticker indicates you've only got 13% over what you need to cover. This is to cover lack of liquidity, I assume.

The max leverage is 2.5x so it is much more then 13%

[adamstgBit]

Has this last drop squeezed any longs for now? How low do you think it should go that we could say longs are properly squeezed?

must be impossible to say, its not like everyone opened a  long at 400  all at once.

old longs might be covering, but at the same time new longs are opening.

[BuildTheFuture]

This is like the 8th day in a row this particular 30 minute candle has been a higher volume down at Bitfinex. Must be liquidations. Is it at 9:30 AM HK time?

[WillyBTC]

IIRC, the margin requirement is 13% (or something like that). So it will liquidate you when the ticker indicates you've only got 13% over what you need to cover. This is to cover lack of liquidity, I assume.

The max leverage is 2.5x so it is much more then 13%

Huh? What did you think was being said? 2.5x means that you are margin called at 13%. Meaning that if there is sufficient liquidity at your margin call price, you will be left with 13% of your original account.

[Gimmelfarb]

sooo, i was a bit relieved to see USD swaps going down on the fall (sometimes we have seen the opposite), but now i see that bulls are pushing swaps up to $30 million again....

29,854,318.41 USD at the moment.

[minerpumpkin]

sooo, i was a bit relieved to see USD swaps going down on the fall (sometimes we have seen the opposite), but now i see that bulls are pushing swaps up to $30 million again....

29,854,318.41 USD at the moment.

The small flash drop the other day doesn't seem to have much effect on the swaps, just a small valley. On the other hand, we seem to be going down for 10 days now - which doesn't look like a bubble collapsing, but rather a small and gradual retreat. But I guess it is still too early to tell if this continues.

[Newbie1022]

sooo, i was a bit relieved to see USD swaps going down on the fall (sometimes we have seen the opposite), but now i see that bulls are pushing swaps up to $30 million again....

29,854,318.41 USD at the moment.

The small flash drop the other day doesn't seem to have much effect on the swaps, just a small valley. On the other hand, we seem to be going down for 10 days now - which doesn't look like a bubble collapsing, but rather a small and gradual retreat. But I guess it is still too early to tell if this continues.

I think they are getting squeezed on purpose. In the face of getting squeezed, like most gamblers, they are starting to double down. It is at this point that the house moves in to take all of their chips. This could get ugly (and at best, it'll just stay sideways and a few guys will be ruined).