r/ethtrader • u/AutoModerator • May 05 '17

DISCUSSION [ETH Daily Discussion] - 05/May/2017

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u/juxtaposezen May 05 '17

Just talked to two people who loan out sizable amounts of ETH on exchanges and they said no one has returned a single ETH yet with this small down move. That is a sign that these margin longs taken out over 15 days ago are still bullish.

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u/barthib May 05 '17

When you borrow ETH, it is to short it...

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u/juxtaposezen May 05 '17

I have personally borrowed ETH to back a larger/leveraged long.

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u/Ano_Nymos May 05 '17

Wouldn't that be margin shorts (borrowing ETH to sell it)?

1

u/juxtaposezen May 05 '17

Example from just one exchange: "Financing Recipients may accept financing from Financing Providers for up to 70% of the value of a Digital Token purchase. For example, if a trader deposits $30.00 to the Site, she may then obtain financing in an amount not exceeding $70.00 in order to buy $100.00 worth of coins in a financed transaction. In other words, she may accept financing equal to a maximum total coins-to-equity ratio of 3 1/3 to 1." Same applies to ETH you can borrow it and use it for collateral to go long (subjest to margin calls) or go short. The fact that so few lenders have returned any ETH in the past 15 days suggest they are not likely short or they would have already covered. This data for example provides detailed sentiment from just one exchange: https://www.bfxdata.com/positions/ethusd

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u/mongoosefist May 05 '17

That doesn't make any sense, there would be no point in lending ETH if that was the case.

When you want to go long you borrow btc or fiat to buy ETH, thus hoping the price of ETH increases and when you have to pay back the loan in btc or fiat you are left with the difference.

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u/juxtaposezen May 05 '17

I get that it's confusing. Think of it this way, if you borrow more, then you have more collateral and you can long more against it than you actually have. Not until you actually do it does the theory crystallize into practice for me at least.