Right now a lot of traders are asking what happened to Bitcoin and what does the future look like? This can be answered with one word... Institutions.
To understand what is going on with BTC let's breakdown the last few months. The above chart has key events marked.
Hype - A world wide buzz to buy bitcoin.
Whales - Institutions and large investors use the global buying power to start unloading bitcoin.
Buying Climax - Institutions and large investors unload huge amounts of bitcoin as desperate retailers try to join the party.
10% of every wallet with >1000 BTC was sold - The after effect of this is seen in the charts as Bitcoin becomes unstable.
Coal Mine Accident - Accident in China sparked the government investigate electricity use scaring BTC miners.
$10 billion of leverage trades liquidated - This happened on the same day as the Xinjiang grid blackouts. As price dropped trades with excessive leverage were liquidated driving the price down further.
Mining Hash Rate Drops - After Xinjiang grid blackouts bitcoin mining hash rate drops over 45%
China Announcement - China reiterates cryptocurrency bans and vow to crackdown on crypto miners/traders.
$8.5 billion of leverage trades liquidated - Organized dump by institutions lead to more liquidations and further price drops.
Things to be aware of:
- With the introduction of futures contracts bitcoin experiences significant dumps at the end of each month when contracts expire as large investors/institutions take profits and close contracts.
even larger dumps are recorded every three months as longer term quarterly contracts expire.
- The more you buy the more institutions will sell. This means that soon as there is hype and public rush to buy bitcoin the institutions will sell, this is how they make money. The only way they can trade so much volume is to go against the public (retailers). For example if an institution wants to place a short with 1 billion positions they need 1 billion long positions to fill the order (this is very easy when there is a global rush to buy bitcoin). This also applies to the opposite, If the public are keen on selling then the institutions will buy.
- With the involvement institutions the future of BTC is likely to be full of "pump n dumps" that don't quite hit their targets. "Stop Loss hunting" is likely to become more prevalent as institutions try to fill orders.
- Rumours are floating around that institutions plan to dump BTC below 25k (This is not confirmed and just speculation but something to keep in mind).
To understand what is going on with BTC let's breakdown the last few months. The above chart has key events marked.
Hype - A world wide buzz to buy bitcoin.
Whales - Institutions and large investors use the global buying power to start unloading bitcoin.
Buying Climax - Institutions and large investors unload huge amounts of bitcoin as desperate retailers try to join the party.
10% of every wallet with >1000 BTC was sold - The after effect of this is seen in the charts as Bitcoin becomes unstable.
Coal Mine Accident - Accident in China sparked the government investigate electricity use scaring BTC miners.
$10 billion of leverage trades liquidated - This happened on the same day as the Xinjiang grid blackouts. As price dropped trades with excessive leverage were liquidated driving the price down further.
Mining Hash Rate Drops - After Xinjiang grid blackouts bitcoin mining hash rate drops over 45%
China Announcement - China reiterates cryptocurrency bans and vow to crackdown on crypto miners/traders.
$8.5 billion of leverage trades liquidated - Organized dump by institutions lead to more liquidations and further price drops.
Things to be aware of:
- With the introduction of futures contracts bitcoin experiences significant dumps at the end of each month when contracts expire as large investors/institutions take profits and close contracts.
even larger dumps are recorded every three months as longer term quarterly contracts expire.
- The more you buy the more institutions will sell. This means that soon as there is hype and public rush to buy bitcoin the institutions will sell, this is how they make money. The only way they can trade so much volume is to go against the public (retailers). For example if an institution wants to place a short with 1 billion positions they need 1 billion long positions to fill the order (this is very easy when there is a global rush to buy bitcoin). This also applies to the opposite, If the public are keen on selling then the institutions will buy.
- With the involvement institutions the future of BTC is likely to be full of "pump n dumps" that don't quite hit their targets. "Stop Loss hunting" is likely to become more prevalent as institutions try to fill orders.
- Rumours are floating around that institutions plan to dump BTC below 25k (This is not confirmed and just speculation but something to keep in mind).