Comparing BTCUSD Longs and Shorts (amount of long / short positions), e.g. as defined by Bitfinex, one can take a general idea whether most of the market participants are short or long. So, if we draw symbol like this: 100*BITFINEX:BTCUSDLONGS/(BITFINEX:BTCUSDLONGS+BITFINEX:BTCUSDSHORTS) we will get 0% - 100% chart, where 100% would mean 'everybody bought, no sell positions at all', and 0% would mean the reverse. The current chart of this is shown above.
Now, if the ratio reaches 90% area, it means that there is 9:1 long to short ratio, and basically people are on long positions. So, the chance that more long positions will appear soon is small: it would need outside traders to open new positions. It is, however, very likely, that existing positions will start (perhaps violently) convert to short. That should theoretically bring the price down, too. If that is the case, we're likely to experience a bear force sooner or later.
Of course there is a number of other things to consider - e.g. Bitfinex data might not reflect the majority of the market. Or, the ratio can go down to 50% very slowly. Or outside traders will actually show up. Etc.
Longs are selling off with no conversion to shorts. To me, that looks like they are cashing out of bitcoin all together and going into usd.
f-73
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Warning: blind speculation following :)
Maybe they're simply manipulating their own data.
For sure what i notice is Shorts vs. Long ratio is radically different on Binance or BitMex.
Longs skyrocketing on Bitfinex whereas price drops 20-30% ? Shorts staying depressed at the same time ?
Not exactly common sense.
I have ZERO evidence, but this looks shady to me.
IF they're actually manipulating this data, why they do ?
Maybeto scare some people and preven them from going Long along this leg down.
It would mean faking a bull trap in order to actually achieve a bigger bear trap ...
My 2 cents, take them with grain of salt.
Thanks for your analysis.
utamaro
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@ft-73, it's wrong to think badly of someone, but you're very often right :)
SloppySeconds
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@ft-73, Finex has to be majority long USDBTC. That is how their business model works.