The Wolf Den #32 - Bitcoin's Worst Day Ever, Covid-19, Markets And More
Bitmex Liquidation Engine Goes Rogue
Please read through this entire tweet thread. While this seems like a tin hat theory, multiple Bitmex traders that I have spoken to today have confirmed this theory. Last night (or early today), Bitmex was liquidating 10M positions at a time into an empty order book, with no bids there to fill the orders. Terrifying - Bitcoin could have literally gone to 0 on Bitmex as a result of their negligence and poor tech.
Bitmex then went dark - offline for "maintenance." We have seen this countless times before.
There were only 15M in total orders from $3500 down to 0. A single "market" sell order of significant size would have literally sent the price to the basement. Really scary.
From experience years ago trading there, I can tell you that I have seen a number of shady practices first hand from this exchange - failed market stops, liquidations during periods when Bitmex is frozen due to too much traffic etc. There are allegations that they have their own trading desk which actively counter trades their customers during these overloads.
I have been railing against Bitmex for over 2 years - hopefully it's time that people will listen and stop gambling away their money on an exchange that is actively working to make sure you lose... and directly to them.
And after all of that? The Bitmex Insurance Fund grew. They made a ton of money on the action. Does this seem right?
Bitcoin Charts
MONTHLY CHART
Levels shown from yesterday's paid newsletter. Price bounced nicely around the lowest new line. Now we want to see closes above $5,873, for starters. Long way to go on the monthly candle, but I am watching that area on lower time frames.
WEEKLY CHART
I also started with a fresh chart for the weekly, considering the move yesterday. These are the lines that jumped out at me. I consider these a good start for support and resistance levels to watch.
DAILY CHART
On a massive move like we saw yesterday, we expect a reactionary bounce of roughly 50%. This happens often and across markets. This is no different. You can see that the 50% retracement level lines up closely with the aforementioned line at $5,873. So now we have to wait and see if there is any real follow through above that level.
RSI is still oversold on the daily chart (not shown). If we make a lower low here, I would expect that we would see significant bullish divergence in oversold territory. I will be watching - this would take a while.
I VERY LUCKILY filled bids at $4000 while I was sleeping - orders that I figured would "never fill" but had been sitting there for a long time. I woke up and price was $5800 - almost a 50% gain while I slept. That was small consolation after yesterday. To be clear, I sold this position at $5,873.
For now, I am cautiously optimistic, but we all need to realize that the trend is DOWN and that yesterday was the worst day ever for Bitcoin. It's not reasonable to start calling it a bottom... yet.
Coronavirus
What is wrong with people? It is long past time for people to take this virus seriously, both in the United States and abroad. The US government is woefully underprepared for what is coming, regardless of what they tell you.
Even if you do not believe that you are personally at risk (young, healthy), exposure will put everyone you love and care about in harm's way, not to mention every stranger you come in contact with. For the sake of others, please take the necessary steps to help stop Covid-19. Read the article below - it's a great primer on what to expect and what to do.
LEGACY MARKETS
Yesterday, the FED announced that it will inject 1.5 TRILLION dollars into the treasuries market to guarantee that there is enough liquidity to keep spreads tight and the market afloat. 1.5 TRILLION DOLLARS! The market bounced 6% in 30 seconds on the news, then immediately dropped back down for historic losses. As you know, I continue to short the market on any significant bounce - it will work until it doesn't. This morning, I saw that cruise stocks were up 35%. To be clear - these are foreign companies that pay ZERO taxes. No matter what the President says, they CANNOT BE BAILED OUT by the US government. I could not short Norwegian cruise lines fast enough at the open today. Price is down almost 25% since the open, in less than an hour of trading. What is happening right now is absolutely absurd.
UNLIMITED LIQUIDITY! What does that even mean? They are going to print money endlessly, continuing to compound the problems rather than solve them. This market was already overinflated and manipulated. We are now paying the price.
No amount of liquidity can cure the coronavirus.
SHORTING
A number of people have asked me how to short the market and individual stocks. There are a number of ways between options, inverse ETFs etc. It's risky, you can lose your money and even more through margin calls. That said, here is the most basic description of simple short selling, which is what I have been doing.
XTZ
The chart above is from February 18th, when I first posted the XTZ trading idea in The Wolf Den. You can push the play button that chart. It took a long time to play out, but eventually my bids did fill. Here is the chart now.
I am not posting this to brag. It took the worst day in the history of Bitcoin for this position to fill - without that happening, it likely would have left the station forever without me. The reason I am showing this is to drill home the idea that patience is key in market and so is following your plan. I could have FOMOd into a position on XTZ at any time in the past few weeks, but I set my orders almost a month ago and let price come to me. ALWAYS TRADE YOUR PLAN.
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The Wolf Of All Streets Podcast
I am beyond excited that The Wolf Of All Streets Podcast has finally been released into the wild! I have been working on this project alongside BlockWorks for months. I was incredibly flattered when they reached out about working with me, since they host the biggest podcasts in the space - including Pomp, Luke Martin and Charlie Shrem.
I have already recorded 7 episodes. The first two were definitely among my favorites. They feature Catherine Coley, CEO of Binance.US and Chris Buikoski, star of the Bachelorette and other Bachelor franchise shows.
You can listen to all of the episodes here. https://blockworksgroup.io/wolf-of-all-streets
For the foreseeable future, all episodes of the podcast will be time-sensitive and will discuss current events and what is happening globally. I am lining up guests who are experts in an effort to be informative and offer accurate intel on what is happening. I do not intend, for now, to continue with jovial interviews since everyone is presently focused on the virus and global markets. I aim to be a voice of reason and concise information in a time of pain and turmoil.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor.