In this CoinSpeaker Exclusive, a leading bitcoin broker opens up his order book and shows a 1000% increase in short trading in the last day.
In an exclusive to CoinSpeaker, Canadian leveraged trading provider BTC Solutions opened up its order books for the previous five day period, showing an increase in short-side trading activity of bitcoin of over 1000% in the past 24 hours.
A consecutive string of $10,000 short sales dominated trading activity at BTC Solutions’ trading service yesterday as the price of bitcoin has dropped more than 10% so far this week.
The $10,000-mark is significant since BTC Solutions caps its user accounts at this level because all trading done on the platform is margin-related, meaning that the principle of the investment is compounded with loans made by BTC Solutions to its customers, in this case of up to 800% the investor’s principle.
“We will see $310 before the week is up,” said BTC Solutions chief executive Adam O’Brien in an interview via Skype. “People are getting bored in the sideways market and want to open shorts.”
Data made available by BTC Solutions of its 5-day order book exclusively to CoinSpeaker indicates a deeply bearish outlook for bitcoin in the near-term. In the past 5-day period, traders placed a total of $89,909 of trades with BTC Solutions using the platform’s unrestricted margin facilities compounded with their own principle.
Of those trades, a total of $84,652 of trading was in short contracts, representing 94.15% of total trades. This is more than double the firm’s usual order book for short contracts, which is about 40% on average.
Although BTC Solutions’ trading data represents a tiny fraction of the $150 million per-day global bitcoin trading volume, it is significant as a guide for price direction since no margin trading services make their data available to the public due to the possibility they might compromise their own ability to lay the trades off with other brokers in order to neutralize their risk exposure. For BTC Solutions, this risk is obsolete since their wholesale trading activity is done separately in Asia by a partner firm.
The bearish statistics provided by BTC Solutions are backed up by those on OTC bulletin boards, too. A market outlook report published by CoinSpeaker Monday showed that 93.59% of all orders on website bitcoin-otc.com were sell orders.
O’Brien maintains that once markets flatline for extended periods of time, investors find that rather than bet on upward swings in the short-term outlook for bitcoin, it makes more sense to sell the currency short, thereby creating a chain-reaction of panic selling activity across multiple exchanges that can be profited from by traders who are early to take outsize short positions.
To grasp the scale of profits that can be made by traders betting downwards on bitcoin’s price movement, BTC Solution’s fees, which are the industry’s lowest for margin trading in bitcoin, offer a useful guide when taken into account with the trading data.
Traders who bet correctly yesterday that bitcoin’s price would collapse and sold short at $389 would have realized a total gain of 111% of their principle investment if they were using BTC Solutions’ maximum leverage offering of 8x principle, while paying fees of just 1.1% for the service, including exit fees.
“The fees are so small that they don’t cut into the profits too much – especially if you move in and out in the first 6 hour period,” explains O’Brien. “Users can make major profits in short times for the massive swings Bitcoin is accustomed to.”
Daniel Mark Harrison is a Chairman & Chief Executive Officer of global investment company Daniel Mark Harrison & Co. (DMH&CO), a Family Office with offices and active operations in Singapore, Bangkok and Hong Kong. He is also Managing Partner of FinTech and blockchain venture capital firm Monkey Capital as well as the author of The Millennial Reincarnations, a novel published in 2015.