veikkuli

What could possibly go wrong?

Short
Not financial advice
Comment: Ratio hasn't even corrected itself, it could get much worse if we bounce
Comment: Longs have started closing, reference to BTCUSDLONGS
Comment: I would remain cautious as last 4 hour candle ATH was again built on BTCUSDLONGS
Comment: We are back to the nasty levels, no leveraged shorts with BTCUSDLONGS going up
Comment: Lol, did the ratio just double on that dip
Comment: 35x more longs already, we almost got back to reasonable levels. Tdlr. SHORTS profits were taken, LONGS are underwater
Comment: BTCUSDLONGS at all time high, is this the getting rich overnight everyone is talking about?
Comment: Interesting action at BTCUSDSHORTS, during today someone has pushed shorts upwards with 400 million usdt and seems to short little bit more every minute
Comment:
Comment:
Well there's some fresh FUD for you, someone started selling USDT to USD at exact same time someone shorted BTC to USDT
Comment:
I wonder how much is underwater

Comments

BTCUSDSHORTS and BTCUSDLONGS are datasets provided by Bitfinex exchange. But the names are misleading. They do not record the number of longs and shorts.

They record the number ofmargined longs and shorts, measured in BTCs.

Example: on 2018-04-22 BTCUSDLONGS closed at 28341.8851 and BTCUSDSHORTS closed at 24171.6528. This tells us that the value of margined longs held at Bitfinex was worth 28341.8851 Bitcoins. You might infer bullish sentiment at that moment because BTCUSDLONGS exceeded BTCUSDSHORTS. But note that the information says nothing about how many traders were involved nor how many longs and shorts. Theoretically, the entire BTCUSDLONGS position (28341.8851 BTC) could be held by just one margin trader, and total longs (ie margined longs + unmargined longs) could be any reasonable number you might imagine.

The same conclusions apply to BTCUSDSHORTS.

When both BTCUSDSHORTS and BTCUSDLONGS are displayed in the same window / pane they provide a crude indicator of market sentiment and historic popularity of margin trading in the BTC spot-market on Bitfinex exchange.

Currently it appears that no other exchange provides similar information, but fortunately Bitfinex is a big exchange so the information becomes a reasonable sample / proxy for the BTC market as a whole.
+1 Reply
moonsie veikkuli
@veikkuli, Thank you for the explanation, but I am not sure what it is you are exactly shorting. Are you expecting the ratio of margin longs/margin shorts to fall, resulting in sharp price decrease? And one last question; BTCUSDLONGS/BTCUSDSHORTS (currently at "23.21") is a ratio figure? So there are currently 23.21 margin longs for every margin short; is this a correction interpretation?
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veikkuli moonsie
@moonsie, Yes the amount of margin shorts is very small compared to margin longs. Might also want to check out BTCUSDLONGS and compare it to bitcoin price before February 1st and after February 1st
+1 Reply
moonsie veikkuli
@veikkuli, Thanks for replying. I compared, and what I notice is: as price goes up, BTCUSDLONGS go up. Price goes down with the BTCUSDLONGS going down. Combined with the crazy margin BTCUSDLONGS/BTCUSDSHORTS ratio and bearish divergences on multiple timeframes of the BTCUSD chart, I think it's safe to say a correction will come. The thing is; will it come now, or will it come after the price goes up even more? And how deep will the correction be? Interested in what your thoughts are.
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veikkuli moonsie
@moonsie, Well yes, and no. Funny enough margin longs went down for 2020, only the recent upside was built on margin longs. How long people can keep buying upwards with margin? I have no idea, I only know the ratio is not sustainable
+3 Reply
Hi Veikkuli, thanks for your insights and well done with the analysis. I don't know how to get this ratio since I cant find it in TradingView, could you explain to me how you got it?
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veikkuli forexschiedam
@forexschiedam, You can divide/multiply/so on tickers with each other by using + - / *
In this case ticker BTCUSDLONGS is divided by BTCUSDSHORTS, leading to ticker "BTCUSDLONGS/BTCUSDSHORTS"
Type that in and press Enter
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I agree, coming weeks will be very interesting. When those longs start to unwind and there are no shorts to soften the fall it can become brutal very fast.
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