An attempt at an alternative explanation, with a final question of my own.
Seems to me that you have to buy BTC in order to sell them,
aren't the shorts going to get reckt as some point if people are not willing to sell their BTC and there is not enough BTC to fuel the various contracts that are settled in dollars?
Nope, you don't need to do anything with the underlying (bitcoin) in order to buy/sell futures, which settle in cash (not bitcoin).
I guess that I don't understand then.
I don't see how you can get the price to go down without selling and no one willing to buy at that price, so the price goes lower and lower, until someone is willing to buy BTC at that price.
Doesn't matter if you are settling in dollars, you still have to sell BTC to get the BTC price do go down and have no buyers.Indeed, we know the actual volume of futures is small if compared to the underlying (actual btc) market. However, sometimes you only have to nudge things a bit to make them move. Besides, there is leverage, which can make money use more effective.
If you always want to push the same way (for example: down), you will eventually need to recharge; but not as much as the whole market moved (the whole Archimedean buoyant force, so to say) - just a fraction. And you can do it OTC - disturbing the market as little as possible, and deferring/spreading the effect.
One thing I don't understand and I hope someone can help me with: why the asymmetry between shorting and longing? If money on one side (short) implies the same sum is on the other (long), intuition tells me the situation should be symmetrical. Intuition can be wrong, though. So why is it said that whales prefer shorting. Is it easier? Does it pay out better, or what is it?
Seems to me that you have to buy BTC in order to sell them,
aren't the shorts going to get reckt as some point if people are not willing to sell their BTC and there is not enough BTC to fuel the various contracts that are settled in dollars?
Nope, you don't need to do anything with the underlying (bitcoin) in order to buy/sell futures, which settle in cash (not bitcoin).
I guess that I don't understand then.
I don't see how you can get the price to go down without selling and no one willing to buy at that price, so the price goes lower and lower, until someone is willing to buy BTC at that price.
Doesn't matter if you are settling in dollars, you still have to sell BTC to get the BTC price do go down and have no buyers.
If you always want to push the same way (for example: down), you will eventually need to recharge; but not as much as the whole market moved (the whole Archimedean buoyant force, so to say) - just a fraction. And you can do it OTC - disturbing the market as little as possible, and deferring/spreading the effect.
One thing I don't understand and I hope someone can help me with: why the asymmetry between shorting and longing? If money on one side (short) implies the same sum is on the other (long), intuition tells me the situation should be symmetrical. Intuition can be wrong, though. So why is it said that whales prefer shorting. Is it easier? Does it pay out better, or what is it?
My sense, regarding shorting, has been that the cascading effect of forcing longs to close remains greater because it causes those longs to have to sell BTC into an already falling market.
The forcing of shorts to close, on the other hand, causes the same selling of BTC however, that selling is happening into a price rising market, which dampens the market momentum rather than exacerbating it.
