A good and in-depth article! Why do you want to overturn the financial capital table?

Overnight Bitcoin (BTC) stayed at the 38k level, with long and short positions at a stalemate.

Sanctions and counter-sanctions resulting from Europe's geopolitical crisis have brought about artificial shortages.

Especially commodities.

Two days ago, the longs on the London Metal Exchange squeezed out the market, and the nickel trading price soared by nearly 250% in two days.

The short-selling hedger does not hold their own spot goods, but those from Russia.

The short squeeze party took advantage of the sanctions and embargo on Russian nickel to launch a surprise attack.

All short positions became naked short positions due to the lack of spot hedging, resulting in serious losses.

Take pancakes as an example.

You have 1 Bitcoin spot, and at the same time you open a 1x short position in the contract market.

In theory, no matter how Bitcoin goes up or down, your position will not be liquidated.

When the price of bitcoin rises, spot profits are made and contracts losses are incurred, and the profits and losses offset each other.

When the price of bitcoin falls, the spot market loses money and the contract market makes money, so the profits and losses offset each other.

This locks in the current price regardless of market ups and downs.

Generally speaking, who would do such a thing? The producers of the pie.

Yes, the miners.

For example, the current price of Bitcoin is 38k, and the miner expects to produce 10 Bitcoins in the next month, but he is worried that the Bitcoin price will plummet, resulting in expected losses. In this case, he can do the above operation and use short contracts to hedge against possible spot price drops.

Of course, there is no such thing as a free pie in the world. What the miner also loses is the additional income that may be brought by the future increase in the price of Bitcoin.

This is called "hedging".

Now a geopolitical black swan event has occurred, and your bitcoin spot has been "embargoed".

The Bitcoin spot you stored in the exchange was frozen indefinitely by the platform in the name of "sanctions".

After the exchange freezes your Bitcoin spot, your contract short position becomes a naked short position.

If other financial capital takes the opportunity to drive up prices and force you to short, you will be unable to hedge and close your positions because the spot is frozen, and you can only watch your short position being blown up.

After the explosion, financial capital will return the large amount of spot goods that it had taken in during the short squeeze to the market, pushing down the spot price.

Up and down, your spot trade makes almost no money, while your short position is liquidated, resulting in serious huge losses.

In this incident, who is the bad guy and who is the fool?

The spectators said: It's all your fault because you are a fool. Why didn't you predict the black swan event and defuse the short position in advance?

You say: I want to close my short position but I don’t have any stock, it’s all because a certain platform froze my spot. The certain platform is a bad guy.

A certain platform said: I can't do anything about it, it's all because of a certain government that wants to impose sanctions. A certain government is a bad guy.

A certain government said: I imposed sanctions for world peace. The country that started the war is the bad guy.

A certain country said: I am doing this for humanitarian reasons, to save the people of a certain region who have been abused by those in power over the past eight years. Those in power are bad people.

The people in power say: I am fighting against separatism in a certain region and defending national unity. The separatists in a certain region are bad people.

People in a certain region said: Those in power do not make decisions for us and are the running dogs of a certain government. We must fight and break away from their rule and oppression. They are the real bad guys.

You are so confused after hearing this that you grit your teeth, stamp your feet, and say: No matter what, the financial capital that takes advantage of my misfortune and forces a short squeeze on me, you are the bad guy!

Don't think this is a crude way of cutting the Gordian knot. Just listen to you slowly telling such a story:

Financial capital funded a government to be elected. A government instigated a color revolution in a certain place and supported a certain person in power. Under the instruction of a certain government, a certain person in power carried out a cleansing in a certain area under its jurisdiction. A certain area rose up in resistance and was suppressed. A certain country and a certain region are geographically close and ethnically connected, and they could not stand it, so they had a conflict with a certain person in power. A certain government took the opportunity to wield the stick of world peace against a certain country that took the initiative to provoke a conflict and announced sanctions. As soon as the sanctions were issued, a certain platform executed the sanctions and froze your spot. Financial capital took the opportunity to force a short squeeze, causing you to suffer huge losses.

However, in the eyes of the spectators, financial capital is the master who is good at exploiting the rules of the game, and you are a fool who is not vigilant enough.

But you just want to hedge quietly.

He was clearly victimized, yet he was still accused of being a fool.

If you get angry and turn the table over, others will accuse you of not following the rules of the game.

You are just like a certain country, unable to express your pain in words.

The only consolation is that you are not weak and you still have the strength to overturn the table...

(Official account: Liu Jiaolian. Knowledge Planet: reply “Planet” to the official account)