The biggest margin call cascade in the history of bitcoin

bitcoin-analysis

I was a bit wrong in my earlier bullishness. Seems like corona caused panic in stocks and in bitcoin. We saw the biggest margin call cascade in the history of bitcoin. Price went unnaturally low because the market was over leveraged while order books were not filled enough.

Chain reaction of margin calls drove price all the way to $3.5k in Okex 3 month futures, which is the biggest market for bitcoin trading at the moment. From Bitmex we have data that at least $1.6B got margin called.

Bitmex and Okex trading machines work similarly, they do not have safety measures for this kind of margin call cascade and because they have taken so big part of the market share of the bitcoin trading that made it possible for this kind of margin call cascade to happen.

It’s good that for example the new FTX exchange is getting bigger market share fast since their trading machine is better.

Corona panic was a great initiator.

Here’s the all time chart with monthly candles, pink average from 200 days, orange average from 200 weeks, yearly opens with dashed lines and RSI with historical lows and highs.

Market needs time to recover after this kind of margin call cascade and a massive dump. Similarly to what happened when we dropped to $150 and to $3k, we need probably 3-6 months before big rally can start again.

Monthly candle should close above the average from 200 weeks or we are in a territory where we have not been in the history of bitcoin. Weekly has closed below this after the August 2015 $200 bottom and that didn’t cause any more down movement, but I suspect it would be better, if monthly candle didn’t close below this important average.

I do not think it is likely that we will go below $3.8k. The margin call cascade was so huge that it took the market unnaturally low. This is why it bounced over 50% right after the bottom. Corona seems to be just starting to spread, but I do not believe it will cause the bitcoin market to go to new lows. It is good to remember that less than 50 people own more than 50% of the money in the world and even more inside the markets that are being traded.

I have a hard time believing that cash is the king anymore while central banks push new money into the market more than ever before. After this short term panic this will have an effect on bitcoin as well.

I hope that you didn’t get margin called and that your family and friends won’t get corona. Hold through these rough times, bitcoin will rise again. If you have savings, it is not a bad spot to add some to your bitcoin holdings especially, if the monthly candle closes above the 200 week average.

What comes to short to mid term price action I think the price will go to $7-7.2k where the yearly open is and then comes back to test the 200 week average.

Why bitcoin is one of the best investments in the world today and why technical analysis works (simply explained)

The author has written over a hundred bitcoin analyses in the span of five years and is very experienced in trading bitcoin.

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