Curious why Bitcoin just jumped $1,200 in less than an hour?
Be curious no longer!
For a good explanation as to why Bitcoin just jumped bigly in a very short amount of time, take a look at the chart below provided yesterday by our very own @techwizardry:
Do you see the interesting part?
Take a look at the second graph, the one that shows the "Margin Shorts" of Bitcoin on Bitfinex.
As of yesterday, those climbed to 38k, which is higher than it has been at any other point on the chart, and one of the highest levels it has been, well, ever.
Why this is interesting:
This is a very interesting development considering prices were basically on or near the lows.
Usually, when short positions build up, it happens at high points, not low points.
The fact that it is at this level AFTER bitcoin has already fallen some 70% leads me to believe that they are about to get taken to the woodshed.
That is exactly what is already happening today.
Check out the price of bitcoin today:
Anytime you have a large number of traders on the same side of trade, prices often do exactly the opposite.
Plus a large short position is basically a built in buy position, especially when it is being done on margin.
Others seeing similar things:
Brendan Playford, the CEO of Constellation also noted an increase in the build of short positions over the past few weeks.
"Over the past two weeks there has been a steady increase in short positions with people betting against the price of bitcoin."
“Further, the long/short ratio on bitcoin hit a record low of 0.80 and started to recover."
Nick Kirk, a quantitative developer at Cypher Capital echoed similar comments to CNBC this morning, saying:
"The ratio of short margin trades versus longs has been increasing recently."
"Buying volume ticked up today and a lot of these short trades got liquidated, helping fuel the rally."
(Source: https://www.cnbc.com/2018/04/12/bitcoin-surges-10-percent-in-sudden-move-to-above-7500.html)
Why use margin?
Margin is interesting because it offers traders and investors a way to leverage their positions.
In the case of Bitfinex, by using margin, traders are basically allowed to use the positions other investors have sitting on the exchange available for lending.
If say you have $10,000 on the exchange and you wanted to short BTC you could only short $10,000 worth. Which means if the price dropped 10%, you would make roughly $1k.
However, if you had something like 5 to 1 margin and made that same trade. When BTC dropped 10%, instead of you making $1k, you would make $5k as the margin effectively let you 5X the size of your trade.
Keep in mind that it works in the opposite direction too, meaning if you are on 5X margin you can lose your money 5X as fast as well.
Stay informed my friends and squeeze those margin shorts!
*Special thanks to @techwizardry for sharing his chart
Follow me: @jrcornel
@JrCornel, thanks for giving me props!
You got it. Good stuff by the way. Thanks for bringing it to my attention!
@TechWizdardry... Thank You for Your Posts.
Following You now...
Cheers !!
Great read - very informative. Though worth noting you can't actually short (or go long!) without margin - only sell and buy!
Very nice. I have always noticed that markets tend to go in the direction that reks the most people. This short rektage is becoming an epic one! hehe . regards @jrcornel!
Very astute observation. I have noticed that as well.
I always look to see what the BTC/KRW pair is doing in times like these! ;)
Have to wonder then, why regardless of the up or down shift, a crypto miner like MGTi is only trading at $1.28.
Seems to me that ultimately secure bitcoin miners with offline cold storage will become smart investments. But, as we know, the main stream media has people thinking crypto is a flash-in-the-pan type of thing. And MSM also seems to be very snarky towards MGTi's CEO John McAfee.
But, as we see people leaving Facebook, Twitter, and Google/YouTube for decentralized platforms, I predict MGTi and other crypto-miners will go up exponentially. But, it will take an equivalent exponential awakening with users still tied to legacy social media.
Hence, I am looking at this all as a 10 year arc.
A film from Adam Sandler, Funny People (2009), (and actually one of the only Sandler films to make me actually laugh), had a scene in it where Adam and a friend pick up some women at a party. The women work for MySpace and were having a huge party. In a scene in a pool, Adam drunkenly yells, "Fuck Face Book!".
So basically, we are waiting for everyone now on Facebook to feel the same way. Pretty sure that video of Mark Zuckerberg did a lot of damage to his brand. I mean come on! The guy walks like his butt is so tight he could eat coal and crap out a perfect diamond!
I would think so as well. I think that eventually money will start sorting through what the good investments are vs. the not so good ones. Money will eventually move into the ones that actually have some substance vs. the ones with the best promotion. That may take some time still though.
LOL nice rant. #fuckfacebook
Short Squeeze baby!!!
Ain't no call like a margin call!!
Hopefully this will be a catalyst for more upside! This sideways movement is ehhhh
Agreed. Having a large margin short position is potentially much more significant than having just a large short position.
Absolutely! That is how you rekt as they say! The bitmex liquidation bot is a fun one to follow on Twitter!
Thanks for the tip!
Some crypto exchanges make it too easy to trade on margin risking that people who have no idea what they are doing (and no real concept of the risks) can trade. Many willmlose their shirts.
Good info on the shorts and its about time for a major squeeze!
This is precisely why I never trade on margin and never wanted to. There is way too much downside risk of getting your entire position liquidated in a single instant. Market manipulation is still a huge factor in the Bitcoin space as we can clearly see :-X!
@JrCornel... Thank You for sharing @TechWizardry post along with Your insightful comments.
Here is another source of information below regarding the reasons for Bitcoin's sudden $1,000 rise by Arcane Bear.
Thanks Again...
Cheers !!
He could have uploaded to dtube!