shorts on bfx are pushing down hard now. that means there's gonna be a squeeze.
could you dumb that down a bit for those of us who are unfamiliar with leverage and options?
seriously, bitcoin is the first time I have ever traded anything.
if 'shorts' are pushing down, does the 'squeeze' mean price spikes down? or up?
I really don't get this
up. but i think it should get to the neighborhood of 650 before that happens. they will overextend. this is not smart money. this is gambling addiction at work. before the capitulation, big money was in short, and could endure a little squeeze here and there, but big money won't be short for long in this environment. i mean think about it, no matter how overbought you consider the market after a quick run up from 535 to 710, if you KNOW for a FACT that there are multiple million-dollar buyers out there, and you've seen all the classic patterns flashing buy buy buy, how far are you willing to push it down? if you're really confident that the book is weak, you will hit it, just because you're an addict, and there is opportunity for a quick buck, but at the first sign of strength, you're going to cover quick.
thanks for explanation.
I am a degenerate gambler type, with a very small risk tolerance. so I like to take money off the table when I can.
If it's not gonna drop below 650, then it's not really worth it for me to sell immediately. On virtex, you need to make at least 3% on each trade, minimum.
virtex I could probably still get 720 CAD, but if stamp only drops to 650 then virtex will probably stay around 700, not enough delta for me.
I need an imminent plunge if I'm going to sell coins.
Maybe I will just wait.
EDIT:
Traders are borrowing coins on margin from Bitfinex and selling them into the market. These traders hope to buy them back cheaper in the future, return the borrowed coins, and pocket the difference. "Pushing down hard" means traders are borrowing additional coins and selling them into the market, thereby helping to push down the price.
There are presently 8,116 BTC on loan to short traders at Bitfinex. These traders are paying on average 27% per year in BTC to borrow them, and at some point in time they will buy them back because they aren't theirs to keep. If the price goes up instead of down, some may chose to buy back to minimize their loss, thereby adding fuel to the rally. At this point, other short traders may be running out of margin (they now have insufficient collateral to cover their mark-to-market losses on their short position) and Bitfinex will force them to cover, squeezing people out of their positions.
ok, I get it somewhat, but I thought that these kind of leverage instruments were supposed to tamp down the volatility, but they seem to exacerbate it?
