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RE: Bitcoin Spikes: Can Anybody Explain Them?

in #bitcoin6 years ago

In regards to the sudden spike in price, I believe you were partially correct, but there's a little more. With the trend of lowering volume these past few months, the market has become dominated by "derivatives", mostly on Bitmex, but also on Bitfinex and others, like Kraken. Just look at the daily trading volumes, Bitmex makes around 5bn, while Binance just makes a little over 1 bn.

Therefore, I suppose there were a lot of short orders around the moving average, based on the assumption that it acts as a resistance level. A whale or group of whales notices (or closely monitors or calculates, I don't know), and they decide to make a sudden long move. Betting that they'll catch both the bots and the shorters.

Their calculations seemed to be correct, as the bots picked up the volume, as you have theorized, but I also think a lot of the short positions were automatically liquidated, bringing the price up.

If you watch the price levels, there's an uncanny correlation between some of the large exchanges, mostly those that offer "derivatives" style trading. For me, this signals there are bots closely monitoring arbitrage opportunities or whatever. So, when the upward movement started, it quickly spread to all these exchanges, also fueling the bot follow-up and short liquidations.