Topic: This Bitfinex Credit Bubble cannot end well - page 12. (Read 62097 times)

It's a mixed bag. You make a great point that this was a very arbitrary and manipulated event such that those who lost won't just feel the burn of the loss (and the diminished purchasing power that comes with it), but will also feel scammed -- that is whether or not that is an accurate characterization (it at least has an element of truth). Thus, you have to replace those guys, many of whom have at least been in the game for upwards of a year, with new blood... it probably won't happen. In some ways, that is why I was hoping for an even more dramatic fall and why I think BitFinex erred in trying to stabilize the market upwards (and anybody holding a bag very rightly would be thinking "f--- this guy" right now) -- the idea being that if the price was low enough that people thought they were getting in at the ground floor (let's say $250 - $350 range) then new people would likely flood in and expand the base. But, even that would be absurd because this was a market event without a proper impetus.

is a exchange not a future contract, longs that sold at a loss were more likely (by volume) to start another long positions for another trader (if is a loser or a winner need to be determined) the short volume was small so the buy-to-take-profits-and-close-short orders were small in volume and this were the winners of the down move

wouldn't the winners have to be the counterparties to the losers and both be on Bitfinex?

The bubble deflated and the platform survived.  Short interest also fall back to 6.4k BTC - reduction of about 1k BTC.  I guess the number of margin-long and hodl people got wiped out.  Will probably take some time before things recover.

^bfxdata show very little shorts vs the longs volume so if there were big winners they were on other exchanges

but you were trying to make the argument that USD leverage can't go up again b/c of the losses inflicted on the previously leveraged.  it can and probably will b/c the winners can redirect their USD winnings to new USD leveraged positions.

edit:  this is a great thread, btw, and i congratulate Blitz for picking up on this important metric.

Welcome back Mat!  Long, short, or flat?  It sounds like you are short, or would be if you didn't give up on shorting completely.

It transferred to the Winners.

It left a lot of losers. Those losers will neither have the appetite nor be in the same position to make Bitcoin investments as they once were. Simply put, those losers have left the market, leaving only the winners looking to make further winnings. Next time around, some of those winners will be losers. They will no longer have the appetite nor the means to make the same level of investments as they once did, etc etc.

This is a declining market. The present primary trend is undeniable. Bitcoin will go up and down, but overall it will go down or at best, simply stagnate and go knowhere anytime soon, as this is the natural momentum in a post bubble hyped up market, as an ever increasing volume of liquidity leaves the market, resulting in less and less fiat in play to keep the market propped up. The declining volumes on all the main exchanges would ratify this view. If one were to take a somewhat contrarian view that the big money is moving into Bitcoin but acquiring their BTC in OTC deals, then this is an ever bigger reason why Bitcoin will continue to go down, namely it would be in big money's interest to depress the price in order to get as good a deal for themselves as possible, before allowing/facilitating/forcing the market to rise again.

I suspect this 'bottom' will play out in similar fashion to late 2011 and the first half of 2013, where Bitcoin crashed to it's $2 low, then hovered around $5-$8 for months. Since Bitcoin has proven that it is unsustainable for the time being at $600, perhaps ~$500 will prove to be the consolidation zone in the fullness of time? Or perhaps this region will also prove unsustainable as either selling pressure from increased adoption (i.e. retailers converting immeidately to USD) and the lack of new liquidity forces existing traders to take profits and/or fold their hands? If that were to be the case, then look out below a few weeks down the line from here.

You know, there are certain kinds of bubbles that people like

Never a guarantee.  But the winners in the dump were the shorters.  They used the funds to open more shorts.  They are now trapped in the current rally.

there is no guarantee that the gained money will be used on leverage and that people dont take profits home

The money did not just disappear.  It was simply transfered to other traders.  The buying power is still in the market.

the total sum of loans wont go up fast people took loses so their collateral is lower and cant borrow much more money

I wonder how many bulls simply transferred their long positions from bfx to OKcoin which only recently began to offer futures.

Despite the recent BTC price bounce and the lower rates (0.05%/day and falling) the outstanding USD swaps continue to fall.  I wonder if people are withdrawing large amounts of money from BFX? 

Despite there being $14 million less in outstanding swaps (we've fallen from $32 million down to $18 million), there is no increase in the amount of offered (but not taken) swaps - which is relatively stable at $4 million.

So $14 million of liquidity is gone.  Some of it might be sitting on the sidelines, for instance people trying to scalp the next BFX flash crash.  How much of the $14 million is in low bids?  You could bid for 40k btc at $350 with $14 million - so I'm guessing the majority of the money has left the exchange.

There might be 10k-20k of low-bid orders on BFX from $250 to $450.  So that could explain 1/3 of the $14 million.

that's how it always is -- one or two lowball bids. most don't bother to do swaps manually when shorting because flash rate is always so cheap.

USD swaps down to 18 million. some people must have got murdered.

Very good, assuming they were longs .

Maybe the same will be true for the shorts at some point.

BTC swaps at 7000!

Still: that's not even 1/5th of the USD swaps at current price.

I was right

It's not disabled - I see a single entry now, 30 btc at 0.0001% lol

I actually checked around an hour ago and there are no offers to borrow BTC as of now. I am not sure if they have disabled BTC shorting or not, but there is no demand for BTC swaps at the moment.