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August 13, 2014, 06:39:09 AM

Good post on reddit attempting to guestimate where the rotting longs on bitfinex will see a margin call.


http://www.reddit.com/r/BitcoinMarkets/comments/2dag4l/bfx_margin_call_watchand_calculations/
interesting post, i'm hoping we test 540 to see if these figures are accurate.


Can someone explain this sentence to the non-finance literate?

"Conclusion if we break below $550 I expect the market to get VERY fast with cascading margin calls on bfx. Admittedly we might need some FUD to get there but those price levels are at least in sight "

If the price falls below $540, those that borrowed at $650 do not have enough collateral to sustain their positions.  Bitfinex will force them to sell.

As for $550 that's a technical point in the charts that we've bounced off a few times.  To break that support means longs are throwing in the towel.

So if bitfinex forces them to sell, what this means that if the price hits $540 we will then have a crash? How much volume of BTC would be force-sold at this level? Thanks for the help understanding this guys Cheesy

The speculation is about a squeeze. People who want to buy cheap are selling now to trigger automatic selling by stop loss orders which could run into a chain reaction resulting in really cheap coins. The current dip could be the result of a successful small attempt at this or could be motions to achieve this with a much lower goal but it would basically be run by people who would fill their positions after their financial attack succeeded or not. It's basically like real cash poker where you don't know how deep the pockets of your adversary are, so some try to bluff big time (drive the price down) and if they fail, they will have a hard time buying back in. If they win, they make a killing out of it. If you are not into that sort of games, stay out of it and wait until next week.