5) If R gets above 1, we're all fucked. Why is this? Because there's a $10m liq, which moves prices down X, which is enough to trigger... more than $10m liq. So there's a positive feedback loop. And BitMEX liquidates the orderbook...... down to 0.
8) Well, for one thing, BitMEX stopped moving down their liqs, even if they weren't filled. They just sat there......... Hoping. Hoping that someone would lift it. But no one did.
10) But they didn't work it aggressively, they kept on hoping it would just go away. That's NOT how a liquidation engine works. A liquidation engine's primary job is to save the insurance fund and other customers, even if that has significant market impact.
12) BTC rallied without the gigantic sell wall of the BitMEX liq. And even more than that--BTC rallied, so fewer people *had* to be liquidated..... Creating a self-fulfilling prophecy. If we could will BTC up above $5k, maybe then it would no longer *need* to go down.
14) Or did BitMEX realize that they had a choice? They could liquidate BTC down to 0..... Or they could go down for an hour, let BTC rally, release some of the liq pressure, and hopefully catch a positive feedback loop removing the need to ever liq the BTC.
16) Anyway probably this is wrong, and probably it really was just maintenance. But maybe not. Maybe BitMEX realized the position it was in: an insane amount of leveraged positions, no liquidity, and no prime brokers to allow arbitrage to save us.
17) (By which I mean--people couldn't buy on BitMEX unless they had BTC physically there.... And then they'd risk themselves getting liquidated in the cascade, with none of their short hedges offsetting their risk engine, and a congested blockchain preventing topping up.)
