Yesterday at 20:00 GMT + 0, Kool and the Gang decided it was time to go stop hunting. The price quickly fell $10 to $226 and it looked as if $220 was next up. However, a malfunction in Bitfinex’s order matching engine stopped the party in its tracks. Various users reported weird account balances, and the inability to place and cancel orders. What do panic traders do when a Bitcoin exchange is stalling? Press a lot of buttons very quickly and hope for the best. The frantic actions caused the price to quickly spike to $235, then careen back towards $226. Word to the wise: when the exchange is stalled, sit back and do nothing. At BitMEX if your browser its connection with the trading engine, you are notified immediately and unable to click buttons (I will expand on that in a subsequent post). Take a read of BitFinex Appears To Have Crossed Streams, BTC Crash On Hold for a more detailed explanation about yesterdays price action.
The market is flashing yellow with caution. Leveraged longs should use this respite to reduce leverage, and return to the sidelines. They should thank their lucky stars that Bitfinex’s Alphapoint roll out is experiencing growing pains. Otherwise, a messy and chaotic wall of liquidations looked likely yesterday. I wrote about the $213 – $225 margin call sweet spot in the May 4th Crypto Trader Digest. The savvy operators want to push the market to these levels, and let cascading margin calls do the heavy lifting.
The market is now consolidating around $230. Expect another attempt in the coming days. This time the longs may not be so lucky. If you share my views, begin shorting XBUK15 with a downside target price of $220. I wouldn’t consider the correction broken until the market can retake $240.