Bounty for a Detailed Explanation of Everything going on with BTS/bitUSD Market
I will donate 50% of the proceeds of this post plus I will actively promote and resteem the explainer article for whoever describes every aspect of this chart, including:
- Settlement
- Call Limit
- Margin Price
- Purpose of the Yellow Shaded Area
- Explanation of the yellow colored order on the books (under the price column)
- Particular strategies you might employ in this market scenario
I'm not looking for definitions or rehashing of what is in the existing documentation. This article should be able draw analogies and serve as a teaching aid to complement existing financial documentation.
Settlement is the feed price indicating what somebody can sell for if they have bitUSD and want to be sure to get bitshares no matter the liquidity of the market. In bitUSD they get 99% of that price.
In some kinds of market settlement can be very different from margin call and catch some people completely off guard even if they have plenty of collateral for their shorted bitUSD.
Margin call is what happens when you don't have enough bts collateral for your borrowed bitUSD. You can still be saved if someone else wants to sell for an even lower price than you're forced to sell at. And that's actually happening a lot today and yesterday, also on your screen shot.
You can see that the person is forced to sell at 0.296874 but somebody else is willing to sell at 0.2933 so the one who's margin called is safe for a little while longer but hanging on with the edge of his nails.
The best strategy would have been to have kept some bitUSD (not shorted) ready at hand to buy at these huge discounts. The second best would be if you have some coins that still have good value, then either sell them for bitUSD and buy a lot of bts.
Or just buy bts directly with your other coins like open.EOS, open.DASH or open.LTC all of which have much better bts exchange rates than a few days ago, even if all them have gone down in relation to USD.
The yellow shaded area is to show that there's a margin call happening. And it's a huge one:
out of the entire selling orders of 37.9million bts, this one margin call is more than 36million bts.
So that's why the yellow area is pretty much filling up the whole part.
This one makes sense. The yellow indicates the SIZE of the sell order, it's larger by area than the entire buy book, thus it essentially goes off the page (high). The Area of the chart is the CUMULATIVE amount of tokens you could buy or sell, to the bid and ask sides of the last price (Latest). The yellow box means that at .296874 you can buy more than 10mm bts at that price. Since we can see it's actually 36mm on the ask book directly, we know the chart needs to be adjusted to a higher scale than 10mm (8mm is the uppermost number on the Y axis but 10mm is the actual top of the axis).
Perhaps the software doesn't bother bc changing the scale to say 40mm would make the buy-book (bids) look frighteningly small. See that little small sliver of horizontal orange line to the left and bottom of the yellow square? That's the 3 sell orders which are front-running the massive sell order, you can see them listed in the sell book (in red). The orange line inside the yellow indicates the rest of the sell book which isn't the big 36mm sell order.
As for the call-limit price and the settlement price, we still don't understand it. Again, "settlement" typically means the price at which transactions have been CONFIRMED.
In crypto, transactions (like bitcoin) take time to settle, even tho the exchange might provide that the trades actually happened. As per our answer below, "settlement" means those sell/buy transactions from the past have been settled by the miners or whatever verfies transactions on the blockchain. It's higher than the "Latest" because the price of BTS has probably declined vs the past trades which were most recently 'settled' by the blockchain system. We don't know exactly how BTS blockchain verifications work, we're more familiar with Bitcoin. In bitcoin, MOST of the problems you hear about with Coinbase shutting down, or other brokerages suspending trading, is because the settlements are taking so long, so the risk for the exchange gets higher and higher as the backlog of transactions grows in the bitcoin blockchain. This is a well-known problem at this point, we've all read about it. But suspension of trade is caused by exchanges wishing to mitigate their risks, as they themselves act as counterparty-at-risk for all trades not "settled". This is why Coinbase has been actively seeking to purchase and/or build a crypto-custodian. It's also why the Lightening Network is being attempted. You can learn more about Coinbases interest in custody and settlement in general by looking up articles about Bank of New York or Pershing. Those are well known custodians who take "settlement risk" on behalf of the brokers.
Think of them as near-term bodyguards, or maybe similar to the insurance of nations having nuclear weapons. Rarely necessary, but in the event of total chaos they'd come into play. In this case, there's a bit of chaos going on here in BTS trading at time of your screenshot. The difference between settlement and Latest prices is telling you that.
More interesting to us, in your picture, is what the settlement TIME might be. Hours ago, weeks? We've heard about these backlogs for bitcoin, but BitShares is supposed to avoid these problems, so a 3 cent difference between settlement price and Latest price would be disconcerting if it's a long time. If the price moved 10% in mere seconds, then this difference isn't so frightening, it just means BTS has been particularly volatile in a VERY short amount of time.
In the case of your picture, what most likely happened was BTS was trading for 32 cents, and this 36mm "fat finger" (look that up, it's probably best seen in the early April (6th?) 2010 cliff dive for stock market) order likely "took out" all the bidders down to it's .29xxx sell price, and thus the price of BTS went from 32 cents to 29 cents in one microsecond. So in this case, the "settlement" price being 3 cents higher wouldn't be that alarming. The alarming thing, is the massive size of the sell order.
We're not posting this to be a POA, we're legit looking for an explanation like BillButler bc we're VERY interested in BitShares exchange and how it works. Mostly, we keep stalling any attempts to trade on the platform, bc the WITHDRAWAL FEES seem to be WAY WAY too big. This would be akin to how Mutual Funds used to rape customers, and back then it was for like 3% of funds. We've found OpenLedger (a portal of Bitshares? might be same fees) to charge insanely high 8-20% of funds to withdraw money from their exchange via Steem, back into the Steemit wallet.
Hope you respond to these additional comments, want to really drill down on the "call limit" thing, we really don't know that one.
What's interesting, further, is the buy book is quite strong vs the "red" sell book. The only imbalance comes from the yellow "sell order" which is listed as the "Margin Call Price". So we're still not entirely sure it's a sell order at all.
Would encourage a trip to their Q&A area, so maybe the BitShares witnesses can settle this (pun) once and for all.
Why would someone need bitUSD to sell bitshares? Isn't bitUSD what you get when you sell bitshares?
Is "sell" a typo, and you meant buy?
If someone was being forced to sell bitshares/bitUSD due to margin call, the sell order would need to continuously adjust lower, losing more and more money for the borrower (until his capital goes to zero in which case the exchange eats the losses). So either we don't understand what you're saying, or it's something else entirely. If someone continuously front-runs the sell order for 36mm BTS, then this is a major problem bc the margin-call will never be completed. So the margin seller wouldn't be on the edge of his nails, he'd be crying bc he's going to lose everything-- especially with his mongo order sitting in there attracting anyone with two cents of sense to front-run him.
This might be the exact explanation, but from your answer we still don't understand the page any better than we did when we first looked at it.
I'm trying to make sense of what you're saying but you might be confusing the concepts a bit.
Settlement and margin call are only relevant for people who have borrowed bitUSD with bts as collateral.
If the price of bts drops too low, there will be a margin call.
Settlement is a bit different. If someone has bitUSD (borrowed or not, it doesn't matter) and presses the force settlement button then he will be given bitshares no matter what 24 hours later.
So basically the people with the lowest collateral will lose their bitshares, NO MATTER HOW MUCH collateral they have.
This is the most dangerous and most important point about borrowing on bitshares. Don't ever be in the list of accounts with the least collateral no matter how safe you think you are.
Because even if you can never be margin called you can still be force settled.
And it's actually happening in huge numbers on the bitCNY market, but not that much on the bitUSD market.
Does this explanation make more sense?
Again if you haven't borrowed anything, then all of this doesn't apply to you, and maybe that's where your confusion about selling and buying is coming from?
I took a screen shot that show when the settlements are happening and at which price. Look at the bottom left corner.
It basically means bitUSD will be taken out of circulation when the settlement happens.
The green buy order line creates Trumps profile and the yellow box represents his toupee storage. I nailed it right?
hey I've made a post to claim the bounty and followed your request. please check it out and I hope I win! thanks for the opportunity!
https://steemit.com/bitshares/@ddangerwu/eli5-detailed-explanation-of-everything-going-on-with-bts-bitusd-market
It's called the end of Chinese New Year Crypto Dance :)
Looks like there is a 86M $ sell trade
Looks like there is a 86*M $ sell trade
Probably an attempt to spoof price, as there is a big buy trade a bit lower (0.27)
Settlement typically means the transaction has "gone thru" or occured. It's a term indicating a form of escrow. In crypto, it most likely means the price at which the blockchain has last verified price; whereas, in yellow might be the price bitshares last traded (without full settlement by the blockchain). Is BitShares blockchain having trouble keeping up with all the transactions? Or do you get this screen ALL the time?
Settlement price might also include mining fees and other commissions.
Whereas "last" traded price does not include such fees, and is posted so people know what BTS price is.
Really wish we understood it more, the margin call price makes no sense to us, unless they mean this is the price at which newest trades are occuring which haven't settled on the blockchain. margin calls are what brokers use to back up a user's account with funds. So if you borrowed money to buy bitshares, a margin call means the brokerage doesn't think you have enough bitshares in your account to cover losses.
For example:
If you have $1,000 in your account, but borrow another $9,000 to buy $10,000 worth of stock/bitshares, a 10% drop in price would wipe out your equity. In volatile markets like today that could happen in seconds. In this case, the broker might set up a price for which you'd HAVE to sell your position, a "margin call price" such that your account would have more USD to support your holding a declining Bitshares price. All this assuming you've borrowed, have you?
We don't KNOW the answers you're searching, but hope anything we wrote is helpful.
Somebody knows. Hoping we get a taker.
Send your request to @stan
I am assumming when everyone was saying "Yellow Blood" today in the Telegram, it has something to do with the yellow shaded areas! haha. Very generous of you. Unfortunately I am not the most familiar with the Bitshares exchange. I am knowledgable of the terms though!
90% of the margin call is this account
https://openledger.io/account/aloha/overview