BFX : Margin Call Cascade Algorythm Explained

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Bitcoin / Dollar (BITFINEX:BTCUSD)

BITFINEX:BTCUSD Bitcoin / Dollar

What we saw earlier was the bitfinex algorythm in case of margin call cascade.
This is the explanatation of how it work (not official one, just guess).

There is a limit for the margin call cascade of about 10% drop in 1 minute. Then the algo stop market selling the bitcoin , and let the buy order to fill the gap. Then it sell again to the previous limit and repeat the processus until it sold every bitcoin from the margin calls.

I m open to any suggestion or comments

Edit : the begin of the action was due to a single 5k sell order to 575.

Haha great insights! The next time there are such a dump I'll move a bit of fiat to bfx

Bullish sign?? ... since $5 million in longs got wiped out?

KyleFromOhio

Downtrend is really strong, i don't see any reason for it goes up from here. Even if it was due to a big sell off 500 has been broken down, soon people will realise that and the sell off will resume.

LeMogwai

to da core!

ShortThePlanet

core is what? $100?

capoeira

$100 is just ground :P

ShortThePlanet

hahah, that's our permabear

LeMogwai

True.. I keep forgetting this all happened between 1-4AM (in the States).

KyleFromOhio

Its morning in China, so yeah... big dump at this time

makes a lot of sense

hehe. ou are a smart guy

Good thinking on that algo change to prevent the cascade..

I think this market should be free. random people controling market is much worse than by public organs.
If you want to protect the lenders, set margin call level higher

capoeira

if you want to protect the lenders : don't allow money lending

LeMogwai

That's why you have banks & loan sharks, no way to avoid greedy bustards from losing money.

algorithm*

The question is who is waiting at the bottom once the cascade is triggered. Bitfix, friends, others colluders.

JavaHut

Others trader, and me :)

Etherum is the reason of the dump.
https://blockchain.info/charts/balance?timespan=30days&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=36PrZ1KHYMpqSyAQXSG8VwbUiq2EogxLo2

nicozi.ziati

also https://blog.ethereum.org/2014/08/08/announcement-on-planned-exodus-withdrawal/

nicozi.ziati

We have 15k more to dump.... downside not over

nicozi.ziati

lol...people always find a "news" that fits

so if someone hit the sell exactly when the algorithm is doing the job it will stop ? and wont liquidate positions ?

cbcb

I am so confused by this and very green to understanding charts similar to above. Instead of asking for an explanation of what this means for the future of bitcoin or how you got to you conclusions, I was wondering if anyone could point me to a tutorial/explanation somewhere on the interwebs.

NatePerez

it's an algorythm that prevents "supercrashes" caused by margin stop outs...there aren't realy tutorials I guess

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