I found the whales and you aren't going to like it

I noticed on Friday night that the massive amounts of BTC shorts where being closed. Initially I thought this was profit taking. Then the % change fell to -11%. But BTC wasn't that low. This continued and is continuing with a total of nearly 20,000BTC shorts closed ($700 Million)/ ~66%

https://www.viewbase.com/bitfinex_long_short_position

Why would the whales do this; BTC is going down and the shorts are printing money. Then the answer came today

They are shorting USDT, yes seriously!

On Bitfinex alone nearly $87 million USDT shorts have been opened. With a +125% increase in the last 24hrs. https://www.viewbase.com/bitfinex_long_short_position/ustusd

The are closing BTC shorts and shorting USDT

Why?

The obvious answer would be they believe USDT is going to rug

Any input or ideas are welcome. personally still shorting BCH and DASH today but I'm tempted to short USDT now

Edit: What I think is going on due to the opening and closing of both USDT longs and shorts. Now about $500 million on Bitfinex alone

Shorting USDT against USD. So they anticipate the price to fluctuate against USD

They also opened up $390 million longs against the shorts. But that in itself is also part of the short.

Normally is you short an asset it can go up or down. But a stable coin is stuck at $1

Going long on it is basically just taking out a loan you can't spend. While still paying the intrest. However if you long to increase demand on a stable coin above the $1 then open a short you create a feed back loop

Shorting sells in the market which you buy with the long. Essentially you are buying and selling a $1 to yourself. With leveraged trading the exchanges money

With the data provided about $500 million USDT has been logged and shorted. Once again it can only be a $1. The most you can get after fees and short intrest is literally 0.01% to 0.05%

So by longing then having a stop loss at around a $1. When the stop loss is hit it creates artificial sell pressure as the exchange sells into the market to close the long and you keep your money. Again because it has to stay at a $1. You then push it down and close your short below a $1 and repeat

If you look at the charts you can see that they are doing this repeatedly with increasing volume

Ultimately if they reach a number big enough. In the billions they can just dump USDT on literally no one crashing the price. Even if it goes to $0.90 the panic to redeem into USD will due to poor liquidity send it down to $0

The shorts they hold against it will automatically become worth 100% x the leveraged trade (2x to 10x)

So they would have 10x thier money in hours. Literally taking the vast majority of liquidity on the exchanges. Possibly in the billions

UPDATE: In the comments I alluded to Kraken being the exchange most likely used to convert and short USDT. Today $200 Million USDT was traded against USD on Kraken: https://www.coingecko.com/en/exchanges/kraken