CRISIS CRIPTOEnfrentamos una semana convulsa y con alta volatilidad en los mercados mundiales, marcada por la insolvencia de FTX, que estuvo a punto de ser comprada por Binance. Como resultado, bitcoin pasó de USD 21,000 a USD 15,600, perdiendo finalmente el soporte establecido en USD 17,500.
En el horizonte de mediano plazo, la tendencia bajista se mantiene y si el precio confirma una ruptura de la zona de USD 17,000, tiende a buscar USD 13,000 como primer objetivo y, posiblemente, USD 8,000. En este escenario, la caída representaría una variación de aproximadamente un 50% del precio actual y un 88% del mayor hito histórico de la criptomoneda.
Como el activo conserva su propiedad y propósito, los inversores lo ven como una gran oportunidad para acumular criptomonedas. Como dijo una vez Warren Buffet: 'compra al son de los cañones y vende al son de los violines'.
Todos los colapsos cripto los podemos resumir con manipulaciones e intentos por regular el mercado con excusas y argumentos provocados por las mismas entidades federativas que hay detrás. Banco mundial, China, Rusia, Reino Unido, y exchanges custiodadores de fondos manipulados. Recuerden amigos, BTC está hecho para la autocuestodia no para intermediarios con intenciones regulatorias y fraudulentas.
Bitcoin-manipulation
Exchanges are the almighty on BTC's paradiseI think that if you are here, you already realize the power of those wallets... Huobi, Binance, BitMex, Bitfinex, Okex, etc.
In case you hadn't been introduced, I will leave you some links at the end of my post.
Let's go to the important
Anatomy of a Shortsqueeze on BTC
As you can see on my chart, the last indicator is a ShortLong plot of Bitfinex L/S being open, Short = Red, Long = Green. The black is a L/S ratio.
You can see a threshold as a broken line, above that level is where "thing happens".
What happens when Short goes out of control? Shortsqueeze. That means a scarce-volume climb up of price, without fundamental or logic. That would push the shortsellers to close their position, and that means a buy over the price. That brings volume to the market, and with volume comes the price and stimuli of the market. Remember exchanges win with the fee.
How can you spot them? Well, the Shortsqueeze leaves their footprints on the chart, and you can use it on your advantage at large timeframes with patience.
I spotted them for yourself on this one.
Although every short squeeze is different in terms of length and circumstance, there are similarities to each event. Given those similarities, we analyze the anatomy of the short squeeze below:
Low Expectations
A short squeeze is often caused by low expectations, which causes bearish investors to initiate short positions . Low expectations are due to a variety of reasons, including:
the company keeps missing earnings expectations
guidance is weak
the company is in a secularly declining field (i.e. newspapers)
management lacks credibility and keeps disappointing investors
management puts themselves, not shareholders first, and keeps plunders the value in a company
the market believes demand will decrease as the company’s product is a fad
the stock is super overvalued and there might be a potential catalyst in the future that could cause the market to revalue the company
Shorts Build the Short position – Put or Short
Due to those low expectations, bearish investors initiate short positions by either buying put positions or shorting the stock. If they initiate put positions, the chance of a short squeeze is lower. If the counterparty who sold the put position offsets some of his exposure by shorting, however, the chance of short squeeze could still be present.
Event That Beats Those Low Expectations Occurs
Given the low expectations, an event that beats those expectations could prompt some shorts to cover, or for some longs to buy.
Those events include:
earnings report comes in way better than expectations
the company announced big contract win
the FDA approves a drug of the company’s
some external event happens that could lead investors to believe there could be more demand in the future
management announces a big buyback program that the market believes
management raises the dividend a lot
guidance blows out estimates
a bullish press release prompts pumpers to ignite a buying frenzy
The Stock Rises and Short Squeeze Occurs
Due to those events, some shorts might cover or longs will buy, causing the stock to go up. The rising stock causes more momentum buyers to pay attention, which triggers more buying. That buying squeezes weak shorts and forces potential margin calls and risk-management buying.
The Short Squeeze Ends
Eventually the forced buying finishes and momentum traders move on to the next name, and the stock begins falling, sometimes dramatically.
Thanks for following me, and remember to save your capital. It's your hammer and your raw material ;)
LINKS
ShortSqueeze extended explanation: medium.com
Okex and BCH Fork: hackernoon.com
Huobi selloff at open market: medium.com