Topic: Bad news from China causing panic sell again? (Read 2410 times)

Bitcoins Communites do not lke China.

At this point, I would take ten China bans over the 51% damage miners have inflicted upon themselves.

go on and start learning to draw trendlines.The 2013 (secondary to the Primary 2011 one)Trendline was already broken in April2014

That will be the long squeeze that has been getting talked about for the past week or two, only for the usual bulltards to pop up and tell us all how the maxed out swaps on Bitfinex are actually bullish.

On Stamp, which is my chart of reference for analysing Bitcoin, we have just tested the long term support line. This is the support line that was tested back just a couple of days before the break out on May 20th. It was tested on the $340 crash. Tested on the October Silk Road Crash, and dates back to where Bitcoin was trending in Jan 2013. If Bitcoin is to rebound and head for the sky, then this is surely the bottom. If however that trendline fails to hold.....then Bitcoin is going down very hard.

China didn't drop so much yesterday, so today they were catching up, which resulted in a more bearish look.

But what's happening on BFX is getting a bit scary. Even if we are still in wave C, this shouldn't have been a major drop.
I suppose BFX going down hard will also somewhat drag Bitstamp down too.

China?

Really?

Not on the charts I am looking at.

This was Bitfinex.

Yeah, when the risks are too high (with leveraged I mean) I supposed it's difficult not to become emotional, and then make mistakes.

Currently China is leading the downward movement. But on BFX the ratio asks / bids has dropped to about 300$ / coin. 

I sit here, and most of the time, I 'kind of' know which way the market is heading. That is sitting here looking only to take a good old fashioned leveraged long position, and knowing when the market might go in my favour or go against me. Therefore I might be able to justify the bright idea to myself, of going over to Bitfinex for a bit of leveraged trading. For example, I have been near term bearish since $645, when I took a loss on a long position because I believed that the market was going down. I had buy-ins triggered between $560 - $600, a position which I folded last night at $590 ($589.98 to be precise). So on the face of things, I have called the market pretty well and I could have made absolutely blistering profits if only I had made my way over to Bitfinex and shorted back when I exited my long position (BTX was still $660 back then). However, as soon as I start playing with leverage, funny things start happening in my head. I learned this lesson the hard way. I wouldn't be surprised if I was sitting on a net loss right now, had I chose to get some funds over to BFX in order for a bit of leveraged trading, even though my finger has been pretty close to pulse of the market the whole time.

Anyhow..looks like we have near parity again between Stamp and BFX. Looks like a lot of leveraged longs are folding their hands at last. Big selling volume on BFX, but not very much on Stamp.

I am aware that with leveraged trading one risks losing 100% of the trading funds if things go really wrong.
That's why I don't do it (yet), I'd have to be 99% sure of a market move. Maybe in the future, with a limited % of my trading funds.
I'm not saying all the last month's uptrend was just leveraged pump, but that it was amplified above 600$ into overbought territory.
And if this correction drops below 500$, it might mean that many BFX traders will lose a lot (because of leverage).

Yeah....but you are aware that with any kind of leveraged trading, the trader doesn't actually own anything and has taken on debt to either sell or purchase an asset. Two essential features of leveraged trading are therefore the fact that the leveraged position is generally a temporary one whereby the trader seeks to quickly profit from market momentum, and also that in a leveraged trade, the trader risks losing everything he has in his trading account.

In the case of a long position for example, If Bitcoin were $500, and I bought 10 BTC with $5K, then I would own 10 BTC. If Bitcoin went down to $300, I would still own 10 BTC.

If on the otherhand I opted to leverage my position and I used my $5K to buy 30 BTC, then I would not own 30 BTC. I would owe the exchange $10K and would be paying a fairly usurious interest rate on that loan and I would be hoping to repay the debt with the procedes of selling that 30 BTC back into market for higher price than I paid, which means I keep the profit margins for myself. If however the market never went my way, and Bitcoin dropped down to $350, then the exchange would force sell my Bitcoins onto the market in order to insure that I had the funds to repay my debt. Thus I would lose 100% of my capital unless I funded my trading account with further USD and I would not own any Bitcoins. I would be totally wiped out.

If this rise has indeed been based largely on leverage, then that is very very bad. It means we are essentially still in a bear market and this was an over exuberant counter trend rally. Worryingly enough, I notice that the the rate of USD swaps on Bitfinex is still at ATH, despite the strong retrace. Having said that, there is no means of measuring the quantity of that leverage that is actually actively being used in leveraged long positions.......but then if it isn't being used, why would anyone take it and sit paying high daily interest rates on it?

China fuel the panic sell.

that doesn't make any sense, that would be like saying the price is dropping because they are anticipating a price drop due to FBI selling coins.

I think it's partly because of the 51% FUD from GHASH and also because we have been rising in price pretty fast the past weeks.

No rhetorical question, I just don't use BFX and leverage trading, so I wasn't sure. Thanks for explaining how it would work.

A rhetorical question I presume? But ok.

Those leveraged longs would be liquidated at either:

a. The Point where the traders got cold feet and were racing to preserve profits and/or minimise losses.

b. The Point where Bitcoin dives so far that their positions are force liquidated resulting in the entire capital in their trading accounts being wiped out.

If any trader for example went leveraged long at $650+, taking out 2.5 leverage ratio with the entirety of the USD in his trading account, then he would be staring down the barrel of total liquidation of his position right about now, another $30 drop or so might do it, unless he recapitalised his account. If however there are a whole bunch of leveraged Bitfinex traders holding out on crashing long positions and cushioning them with further capitalisation of their trading accounts, and they do indeed manage to ride out the storm, then we could expect a shit ton of selling pressure on the way back up. If it transpires that this mad break out was sponsored largely by leveraged trading, then we are likely still in an Elliott Wave B of a Wave [4] correction, as opposed to in the midst of a new impulse wave. If this were to be the case, then further upside from here will be limited. Indeed, Bitcoin hitting $750 would be an absolute text book 50% counter trend rally top, for the correction from $1160 to $340.

Also worthy of note, is that the Selling pressure has all come from Stamp for this leg down with other exchanges kind of following into line behind them. Stamp doesn't do leveraged trading, all the other large exchanges do. It seems almost like Stamp knows that the market is balanced right up high on leveraged stilts at the moment.

Correct. Mat, you used to trade on BFX, can you explain under what conditions the leveraged longs would be liquidated?
I believe those are responsible for most of the pump from 450$ to 680$.

The market wouldn't be so sensitive to 'FUD', if it were not already wildly over extended and speculative.

When the market is moved by the FUD, what are you going to do? Try to fight the market? Even if you are a whale, you will lose.

I've just added China to my ignore list

Nope, the China dragon is silent....for now, until the 6th or 7th China ban begins.

Nono, is not the bad news from China.

Sell again is caused by the news of U.S. Government which wants to sell 30.000 BTC with an auction !