The next bull market + collapse of short interest bubble

[SmoothCurves]

the crash was not driven by manipulation, the run-up was.  Now the free market is correcting btc value, I still think were going down in the near term (next 6-8 months).

The latest move downwards (from below 600) is probably one of the clearer moves of direct market manipulation I have ever seen. Up there with gold moving vertically down 50 dollars when the SNB announced it would peg to the euro or when QE4EVER was announced last year by the FED.

A single glance at bfxdata shows 24,350 coins are currently borrowed in BTC swaps for shorts. This is virtually at the ATH despite a price 85% down from the actual ATH. A lot of small traders are expecting price drops. Yet those drops aren't happening and once the market begins to collectively realise we aren't going lower, there is only one way for it to go. And those coins need to be bought back. The average number of coins swapped for short contracts through most of 2014 was between 5,000 and 10,000 - mainly closer to 5,000. The change since august 2014 is quite instructive to observe. Short interest has risen 500% since then when the price was 580 ish. Short interest soared from 5,000 upwards, fell back after a major selloff, then rose even higher to where we are now.  

So what I am saying is that most of this entire move is manipulated with the use of leveraged selling into the market, allowing major players to accumulate astonishing amounts of bitcoin in the recent capitulation low, probably off exchange.

The great thing is we will find out over the coming months, won't we. Either the price will nose dive into the ground (because ..the chart..but the chart!..oh shiii) and the former CEO of Citi will have chucked away millions of dollars betting on bitcoin (today investing in coinbase) or it will rise. And if it rises, it will rise very quickly indeed - the bitcoin price is currently a football being held under the water - something that is hard to do for very long.

This is what the football surfacing might look like: https://www.tradingview.com/v/dHbn7XZ4/

I actually laughed out loud when I saw that. Brilliant antithesis to the bearish tone on this forum.

Good. I think we've seen enough bearish sentiment on these forums.

[waaat?]

Bitcoin fundamentals are crap. The high inflation will prevent it from taking off anytime soon.

[ensurance982]

Bitcoin fundamentals are crap. The high inflation will prevent it from taking off anytime soon.

High inflation? Year alright, the initial deployment of the coins. But you do realise that more than half of its coins have already been distributed? If you take into account the potential masses of FIAT money still not brought into the game, we're still at the beginning of things getting interesting.

[jaredboice]

How far is this from being a possible scenario for 2015?

The bottom is in. After a huge volume capitulation the bears cannot push the price down any lower - the invisible selling hand has stopped selling.

VC funding continues to pour into the space ignoring the bitcoin price entirely (75,000,000 USD in coinbase today including investment from US banking partners). The reason for banks investing is they know that the Bitlicense (due to be released in days) is positive for bitcoin. Once bitlicense is released and major players are positioned the ETF will go live shortly after, resulting in an avalanche of investment capital entering the space.

The entire 'crash' of inexplicable selling (in a sea of positive fundamentals) has been major players manipulating the market to buy up as many coins as possible for the next bull run.

They are now positioned and with short interest near ATH's still and long interest languishing at levels not seen for almost a year, it is time to push the price back upwards. This will squeeze the only gamblers who aren't in on the move - retail shorters - who are all sure we will see sub $100 coins. The squeeze will signal the start of the next bull run and drive the price back upwards towards 500 dollars where it will stabilise temporarily.



Once the ETF is announced the price will begin moving upwards rapidly and draw in institutional investors and joe public alike. Online companies will begin offering a discount to buy goods online with bitcoin, creating a persistent use case for widespread adoption of the coin. The price will break 1000 dollars and keep moving upwards resulting in a mania of the like not seen since 2013.

Hopefully

EDIT: Previous low 166.45, current price 213.29

EDIT2: Added the historic btc short swap data..

EDIT3: Added bitcoins day destroyed to show that coins arent really moving despite the price weakness. This is new coins on the move!



EDIT4: Can you see a high volume capitulation event? We thought it was October when the price hit 274 but the move in January was huge..

Inca, what exchange was the chart of those shorts/swaps from?  Could you possibly provide a link?  Thanks!

[inca]

Inca, what exchange was the chart of those shorts/swaps from?  Could you possibly provide a link?  Thanks!

Bitfinex is the exchange. It is the only Western exchange which allows leveraged trading that I am aware of. I am not convinced of the usefulness of the data coming out of the Chinese exchanges.

All the data is freely available on the excellent bfxdata.com

[jaredboice]

I thought it was Bitfinex
Someone was asking and I wanted to be sure

[deine mudder]

What's that? 25k coins need to be bought back? That's mining production of only one week. Sorry to pop your bubble there but the buyback of 25k coins isn't significant in the bigger picture.

[waaat?]

shortsqueeze, ok. Happens before every big drop. Whales could pump and dump their way out. Bearmarket continue. Bulls will continue to be slaughtered.

[inca]

What's that? 25k coins need to be bought back? That's mining production of only one week. Sorry to pop your bubble there but the buyback of 25k coins isn't significant in the bigger picture.

Try buying 25,000 coins on finex and see how far you get

[deine mudder]

What's that? 25k coins need to be bought back? That's mining production of only one week. Sorry to pop your bubble there but the buyback of 25k coins isn't significant in the bigger picture.

Try buying 25,000 coins on finex and see how far you get

i could buy that across exchanges in under 3 days and wouldn't move the market up (if i had the funds)

[inca]

What's that? 25k coins need to be bought back? That's mining production of only one week. Sorry to pop your bubble there but the buyback of 25k coins isn't significant in the bigger picture.

Try buying 25,000 coins on finex and see how far you get

i could buy that across exchanges in under 3 days and wouldn't move the market up (if i had the funds)

The point with a squeeze is you haven't got three days. You may have three hours.

[deine mudder]

What's that? 25k coins need to be bought back? That's mining production of only one week. Sorry to pop your bubble there but the buyback of 25k coins isn't significant in the bigger picture.

Try buying 25,000 coins on finex and see how far you get

i could buy that across exchanges in under 3 days and wouldn't move the market up (if i had the funds)

The point with a squeeze is you haven't got three days. You may have three hours.

Sure, but a 'squeeze' only occures in a bearmarket and will not help bring down shorts in a meaningful way. Just temporary.
People will short from the top of the squeeze again. You'll get even more shorts.

Don't beat the dead horse.

[jaredboice]

#TrollLogic 

[plasticAiredale]

the crash was not driven by manipulation, the run-up was.  Now the free market is correcting btc value, I still think were going down in the near term (next 6-8 months).

The latest move downwards (from below 600) is probably one of the clearer moves of direct market manipulation I have ever seen. Up there with gold moving vertically down 50 dollars when the SNB announced it would peg to the euro or when QE4EVER was announced last year by the FED.

A single glance at bfxdata shows 24,350 coins are currently borrowed in BTC swaps for shorts. This is virtually at the ATH despite a price 85% down from the actual ATH. A lot of small traders are expecting price drops. Yet those drops aren't happening and once the market begins to collectively realise we aren't going lower, there is only one way for it to go. And those coins need to be bought back. The average number of coins swapped for short contracts through most of 2014 was between 5,000 and 10,000 - mainly closer to 5,000. The change since august 2014 is quite instructive to observe. Short interest has risen 500% since then when the price was 580 ish. Short interest soared from 5,000 upwards, fell back after a major selloff, then rose even higher to where we are now.  

So what I am saying is that most of this entire move is manipulated with the use of leveraged selling into the market, allowing major players to accumulate astonishing amounts of bitcoin in the recent capitulation low, probably off exchange.

The great thing is we will find out over the coming months, won't we. Either the price will nose dive into the ground (because ..the chart..but the chart!..oh shiii) and the former CEO of Citi will have chucked away millions of dollars betting on bitcoin (today investing in coinbase) or it will rise. And if it rises, it will rise very quickly indeed - the bitcoin price is currently a football being held under the water - something that is hard to do for very long.

This is what the football surfacing might look like: https://www.tradingview.com/v/dHbn7XZ4/

I actually laughed out loud when I saw that. Brilliant antithesis to the bearish tone on this forum.

Good. I think we've seen enough bearish sentiment on these forums.

$28K by April??? Mama mia! Thatsa spicy football.

[NotHatinJustTrollin]

The bottom is in. After a huge volume capitulation the bears cannot push the price down any lower - the invisible selling hand has stopped selling.

"The invisible hand has stopped selling". "Bears who can sell have sold and are now gone"
That's not how markets work. A lot of liquidity providers in exchanges are just traders and they can dump as soon as they see the market lacking confidence and buying pressure.
Do you think all the ones who bought at $150-$200 are permabulls that are gonna HODL forever and never sell? Definitely not.

The high volume is simply because it was a crash of proportions not seen for a while. Price went in a free fall that margin called and stopped longers, late shorters, a lot of people sold, a lot of people got dumped on, resold, a lot of coins exchanged hands.
High volume alone is not necessarily a sign that the capitulation is in or that eventually BTC will actually capitulate and start a new bull run.

VC funding continues to pour into the space ignoring the bitcoin price entirely (75,000,000 USD in coinbase today including investment from US banking partners). The reason for banks investing is they know that the Bitlicense (due to be released in days) is positive for bitcoin. Once bitlicense is released and major players are positioned the ETF will go live shortly after, resulting in an avalanche of investment capital entering the space.

For VC money related arguments, read my thread: https://bitcointalk.org/index.php?topic=931714.0

The entire 'crash' of inexplicable selling (in a sea of positive fundamentals) has been major players manipulating the market to buy up as many coins as possible for the next bull run.

This is just a claim without any evidence.
One of the reasons market has been crashing for a year is simply lack of demand, a lack of demand that you can observe in the bid sum slowly  drying up over time in all exchanges: check coinsight.org

The hypothesis that the crash is a reflection of demand simply not being there and no new money hitting exchanges has evidence that supports it, the "it's all manipulation" hypothesis has practically none.

They are now positioned and with short interest near ATH's still and long interest languishing at levels not seen for almost a year, it is time to push the price back upwards. This will squeeze the only gamblers who aren't in on the move - retail shorters - who are all sure we will see sub $100 coins. The squeeze will signal the start of the next bull run and drive the price back upwards towards 500 dollars where it will stabilise temporarily.

Longs are still higher than shorts. Don't see the point. The "shorters have to eventually buy back" applies to longers as well, a lot of them are severely underwater and have already been margin called and stopped.

Once the ETF is announced the price will begin moving upwards rapidly and draw in institutional investors and joe public alike. Online companies will begin offering a discount to buy goods online with bitcoin, creating a persistent use case for widespread adoption of the coin. The price will break 1000 dollars and keep moving upwards resulting in a mania of the like not seen since 2013.

The second market investment trust fund has not done much for the price to be honest. Don't know why another ETF will do the trick.

[cypherdoc]

Inca, how about an updated rich list?

[inca]

Inca, how about an updated rich list?

I am a little short on time but this is lifted from bitcoinrichlist.com and seems up to date in terms of block count. Note the complete lack of selling in the recent 'crash'. Business as usual from the largest commodity holders.



A quick update on the price is needed. We continue to rise upwards in a stairstep fashion.



But though shorts fell back with the move upwards from 160 to 259 (61% up from low) they are still at 18000. Looking back on the historical one year chart there is still a LONG way for them to drop back to a typical level.



Cue lots of gnashing of teeth from bears. I suspect we are in for a typical bull market trend change. We may spike upwards towards 280-300 then flounder for a time before continuing back upwards over the next few months. When the short interest falls back to 10k we can say perhaps the price may reach a temporary plateau. Also of note the long interest remains low at 16 million dollars and lending rates on BTC and USD are now low. This suggests to me that at least some of this price rise is new buying.

[NotHatinJustTrollin]

I don't know why you keep talking about the number of shorts. 18k is not high at all considering that their USD value is a lot less what it was when price was at $500 or $400.

Longs are still A LOT higher, as always...


And technically what you are referring to is not "short interest" but quantity of BTC swaps. The short interest is how much you are getting if you are lending your coins (0.005% or something, haven't checked that in a while), and that is not an bullish/bearish indicator whatsoever.

[jaberwock]

Bitcoin fundamentals are crap. The high inflation will prevent it from taking off anytime soon.

lol?

This is BTC wall observer, not doge wall observer.

And the inflation problem will be solved within some years(but I bet when it happens you will say that the problem with BTC is low incentive for miners)

[inca]

I don't know why you keep talking about the number of shorts. 18k is not high at all considering that their USD value is a lot less what it was when price was at $500 or $400.

Longs are still A LOT higher, as always...


And technically what you are referring to is not "short interest" but quantity of BTC swaps. The short interest is how much you are getting if you are lending your coins (0.005% or something, haven't checked that in a while), and that is not an bullish/bearish indicator whatsoever.

Because the number of short swaps are heavily correlated with the price movements. Please look back through the finex all time chart and find higher short interest than the last three months, thanks.

I know you have to be pedantic because you have been wrong about double digit coins now for 61% and counting from the low.