Anyone consider the possibility that some nervous/smart (time will be the arbiter) miners may be using shorts on BFX to hedge some of their future production in uncertain times. This would make that portion pretty much un-sqeezable as they are not really naked short.
I have no idea if this is practice is currently going on, but as the market matures I would imagine it will almost certainly appear in the same way it exists in other commodity markets.
Just throwing it out there, as the number seems, on the surface, alarmingly high. But perhaps it is in part evolution of the ecosytstem.
I do however think that the numbers of both longs and shorts are disproportionate to the amount of liquidity can BFX provide, and that is cause for some concern.
Topic: This Bitfinex Credit Bubble cannot end well - page 5. (Read 62097 times)
A cascading short-squeeze would mean the price will crash upwards, not downwards, right?
Yes, when a squeeze of this kind happen people have to buy back to liquidate their position, kicking the price even higher. Hence the cascade effect with all those who follow
Still no proper squeeze 
I wouldn't expect it at these prices. At 400, 500 it might get interesting.
This is getting to be a concern.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
A cascading short-squeeze would mean the price will crash upwards, not downwards, right?
Still no proper squeeze
23,364.13 BTC
Could BFX be taking up swaps themselves to reduce the availability and increase the cost of the shorting option?
OR, is somebody taking up a bunch of swaps to do an epic dump, soon?
23,364.13 BTC
This is getting to be a concern.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
How does the algorithm work?
They restrict order execution when large orders will cause Bitfinex to fall considerably below other markets. They don't allow it to be dumped at once; rather, they let it dump below other exchanges, then let traders buy up the gap, before allowing more of the dumps to execute. In other words, Bitfinex is speculating on its own exchange -- assuming that traders will keep buying as long as Bitfinex price is below other markets.
One problem, of course, is that they may be wrong. In the case that the order book can't cover margin calls, this algorithm will exacerbate the losses its lenders will suffer, since it will allow bid liquidity to be removed when forced executions should have already occurred.
This is getting to be a concern.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
How does the algorithm work?
This is getting to be a concern.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
Agreed. I am not concentrating on catching margin calls on Bitfinex, but rather on BTCE, who has a history of allowing cascades through the book without reversing orders. Bitfinex's algo can be taken advantage of though, to be sure. In the past, when I saw the zig-zagging price action that the algorithm caused (since orders were being held by Bitfinex), I was able to safely fill bids $30 below market and sell $30-40 higher just minutes later.
This is getting to be a concern.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
The world's tiniest violin springs to mind for some reason..
This is getting to be a concern.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
I've got some low-placed bids, but the problem with that is that if there is a flash crash, Bitfinex has an algorithm to delay it. And they also might intervene to reverse orders as they have done once. So it is hard to predict how to take advantage of this. I'm guessing that a small crash will be acceptable, but a larger one could be slowed down (and thus partially stopped) or lead to reversed orders. So very low bids are less likelier to succeed that you would otherwise expect.
23,364.13 BTC
What is the significance of this? Is it that lots of people have short positions? Hence may cause a huge spike in price when their positions get liquidated?
Exactly
23,364.13 BTC
What is the significance of this? Is it that lots of people have short positions? Hence may cause a huge spike in price when their positions get liquidated?
BTC 21,498.27 BTC
Are you sure? I think the Bitfinex order book is relatively deep. Over the past 30 days Bitfinex did almost twice the trading as Bitstamp (630,000 vs 330,000). So the risk of a flash crash may have increased, but I'm not sure it'd be a big increase.
And I think we need confirmation from Bitfinex as to whether they were still using Bitstamp.
Last night the bid depth at Bitfinex was around 14,000 at 245 and now it has fallen to 4000. That might make me agree with you, but on the other hand the ask volume is the approximately the same (around 4000 at 295). So it looks like people just pulled 10,000 from the bid book which is enough to make me worry on its own.
And I think we need confirmation from Bitfinex as to whether they were still using Bitstamp.
Last night the bid depth at Bitfinex was around 14,000 at 245 and now it has fallen to 4000. That might make me agree with you, but on the other hand the ask volume is the approximately the same (around 4000 at 295). So it looks like people just pulled 10,000 from the bid book which is enough to make me worry on its own.
Because Bitfinex apparently uses Bitstamp for mirroring bids (which now have vanished), they are now at extreme risk for a flash crash.
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