This should be the only opportunity for retail investors to blow up the market maker, so please read carefully. (There is additional updated information at the end of the article)
First, let's get to the conclusion: everyone should now buy a long position of $BULLA worth 100u, and then buy 100u of Alpha spot. If ten thousand retail investors come together, we can blow up the BULLA market maker.
Friends who are paying attention to $BULLA should have already seen that this market maker, relying on over 99% control of on-chain spot, has been ruthlessly ramping up and crashing in the contract market, after a tenfold increase over the past few days, it crashed by 99%, treating us in the contract market like ATMs!
I've been tracking $BULLA's data and spotted an opportunity when it dropped last night. After BULLA hit a low of 0.012 this morning, I discovered a data bug, which is also our only chance to turn things around as retail investors.
First, we see that after the price drop, BULLA's market capitalization is only 4.38M, and the total circulating supply is 280M.
Next, let's look at another key data point: the open interest of bilateral contracts, which is currently 1.3B, or 1.3 billion contracts.
Some users may see data around 650M on the app; this is one-sided data. As you know, one short position in a contract corresponds to one long position, so multiplying the one-sided data by 2 gives you the two-sided data.
Let's explain using one-sided data. Before yesterday's sharp drop, the open interest was less than 60M, a fraction of what it is now. After the drop began, the open interest increased dramatically by 600M. Do you think this increase was created by retail investors shorting? Obviously not. The vast majority of this was definitely created by market manipulators themselves. Let's assume it's 500M.
In other words, the big players have a short position of 500M tokens, but the total circulating supply is only 280M!
The specific meaning of these two figures is that if the token price increases by 1 unit, the spot market value will increase by 280 million, but the notional value of the short position will increase by 500 million, which is almost twice the spot value.
Those who frequently short sell know that when shorting, if the price rises, the unrealized loss on the position can increase very quickly and significantly. This is because the notional value of the short position increases.
By now, you should understand: the current market manipulators are shorting by a factor of 100. If we buy just one dollar worth of the spot market, they'll lose at least two dollars on the contract!
The current total market capitalization of spot trading is approximately 400 billion. So, if I had 500 billion, I could use 100 billion to establish a long position in contracts, and then use the remaining 400 billion to gradually accumulate spot trading, which would force the market manipulators to their knees. If the market manipulators try to suppress prices and then close out their short positions at low levels, sorry, I'll just push the spot price up directly. I won't be so foolish as to short or close out my long positions at the bottom to help them take over their positions.
If the market maker hadn't been so greedy, shorting at double the oversold level, there was actually a way to salvage the situation. He could have sold all his spot holdings to me, and since there were no counterparties in the contract market, he could have been liquidated. In that case, he would have made 4 million in the spot market and lost 4 million in the contract market, allowing him to break even.
However, since it's already oversold, then sorry, as long as everyone buys spot to squeeze the shorts and builds up long positions, the only thing waiting for the big players is to be liquidated at a high price!
Returning to the conclusion, if each person buys 1000 USDT in the spot market, then theoretically 4000 retail investors could essentially buy up all the spot market shares. Of course, in reality, that number is unlikely; I suspect that adding even a few hundred thousand USDT in spot market buying pressure would be too much for the market makers to handle!
So I'm calling on all retail investors like me to rush into $BULLA now. First, go long on some contracts, then buy some spot. I suggest a 1:1 ratio, and go all in on the bullish market manipulators!
Those who went for it, leave a comment! Let's show the big players the power of us retail investors.
February 2, 22:02 Latest update: (Current price 0.02, price at the time of original publication 0.017)
After discussing with the community during the live stream tonight, we feel that the better strategy right now is to directly buy Alpha spot, instead of diversifying funds into futures contracts. There are three reasons for this:
Spot prices are lower than contract prices most of the time because market makers need to make the contract fees positive so that short sellers can profit from the long position fees, hence the discount on spot prices.
If a short squeeze cannot be successfully achieved in a short period of time, the market maker will most likely trade sideways for several days. Holding the spot position incurs no fees and is easier to hold.
Market makers are extremely afraid of being squeezed out by a rush to buy spot tokens; buying spot tokens directly would be even more damaging to them. The Alpha spot pool currently only has a depth of 800,000 USDT; buying even 100,000 USDT worth of tokens could likely push the price up by 20% or more.
Several possible future trends for BULLA:
The scenario of retail investors winning big: We really pushed the price up, quickly rising above 0.1. I estimate that the average price at which the big players built their short positions was between 0.1 and 0.2. Once it reaches above 0.1, if we have pricing power over the spot market, the big players will be forced to gradually close their positions at this level, which will further push the price up rapidly. Unless a large number of retail investors come out to short the market and help the big players get out of their predicament.
Light's Scenario: Without sufficient buying pressure, the market maker trades sideways at low levels, using time to create space, pulling the price up for a week or two, or even further driving it down. Then, with the continuous consumption of funding costs, they gradually absorb some of the opposing positions at the low level. Finally, they make a sudden surge, simultaneously closing out their long and short positions at the high level.
Light surged 400% after consolidating for 10 days. The short squeeze failed, and the market maker won decisively: There are two possibilities, a. a new share issuance in the spot market. b. delisting of the contracts.
a. If the market manipulator can issue an unlimited amount of new tokens, then no matter how much capital we have, we won't be able to buy up all their spot holdings and force a short squeeze. Binance's security check mentioned no risk of malicious issuance, so that can be ruled out. However, 47% of the tokens are currently locked up and will unlock on February 28th. Therefore, we can't afford to engage in a protracted battle with the market manipulator. If everyone works together to push the price up, we can crush it in a day or two.
Binance Contract Security Check However, the spot unlocking on February 28th is open to interpretation. In conjunction with the second scenario mentioned above, it's possible that the market manipulators will trade sideways for a month before the spot unlocking, causing the price to continue falling and allowing them to close out their short positions at a low level.
BULLA Unlock Time b. Risk of contract delisting. If Binance deems Dogecoin too volatile and issues a delisting announcement, that's quite risky. If this happens, it's advisable to close your positions immediately. Delisting means forced liquidation, eliminating the need for large investors to try and close out short positions at lower prices. Of course, if Binance actually does this, it's protecting large investors and harming retail investors.
Therefore, in summary, as long as the contracts remain available, if we retail investors unite and continue buying spot, we can force the market manipulators to follow the first and second scenarios. If we cannot generate sufficient buying power, the market manipulators will likely consolidate for a month, and then proceed with their next move as the spot contracts unlock.
Latest update at 11 PM on February 2nd (current price 0.0199):
A risk to note: the market maker has already closed 20% of its positions, and the price has risen as expected, but the increase is less than I anticipated. There are two possibilities: First, the market maker still holds a large number of long positions, effectively closing both long and short positions, which has little impact on the price. Second, many people are shorting, becoming the counterparty to the market maker's short covering. Regardless of the specific possibility, it's crucial to continuously monitor changes in open interest and avoid blindly going long.
Updated at 10:00 AM on February 3rd (current price 0.23)
Sorry, we failed; the short squeeze didn't work. It seems many people at this level either had their long positions liquidated or actively shorted, leaving the market makers to take over their positions. This morning's sell-off from 28 to 18 was specifically designed to force long positions to liquidate, allowing the market makers to reduce their short positions. Now, the open interest has reached 400M, close to the spot price, meaning there's no longer any chance of a short squeeze.
However, we've also achieved a great victory. Since I first posted this article, the price has increased by over 30%, with a peak increase exceeding 60%. And it's probably not over yet; open interest will decrease further, and the price will continue to rise for a while. But don't be greedy; take your profits when it's time to exit, don't linger.
In addition, thanks to our efforts, the market manipulators discovered a crisis in the spot market and bought back some of the spot shares they had previously reduced, fearing that they might actually be forced to sell at a loss.
Furthermore, I predict that after this wave of short covering, there might be another opportunity to go long with the big players. Due to space limitations, I will explain the reasons in a later post. Welcome to follow, retail investors will surely succeed!
