Let's review BTC after all the hype of the current pullback.
Discussion
It's been amusing reading analysis from so-called experts on Reuters and Yahoo finance. The Youtube videos by 'gurus' are not funny, they are just plain sad!
So let's look at some of the arguments from the VSPs (very serious people):
1) the so-called 'crash' was caused by Hash Rate failure. REALITY: Hash Rate as indicated (refer chart) has not materially declined - unless the data is wrong - there is no sign that this explanation is correct.
2) Fiat Currency is destroying BTC in order to teach El Salvador a lesson. REALITY: What evidence is there that the price move is materially different than what has already been experienced in the recent past? Do these VSPs check-out a daily price chart? (refer yellow box indicates a larger move)
3) It's a sad day when the Youtube gurus trade the past, and do it sooo badly they even confuse the dates. One minute they are in the future using past information, the next minute they seem to mix the dates of volume vs price as if one leads the other, but they are actually pointing to the sell off bar its - it's like the worse of the worse. REALITY: Time travel is not yet possible.
4) Panic to regulation and taxation. REAILTY: Actually most countries have property ownership laws and taxation on gains . Property laws protect consumers, and taxation normally affects only the HNW investors, who usually manage their affairs to avoid tax.
5) China has banned cryptos . REALITY: China has banned margin FX for years and yet the industry still exists. Chinese regulation waxes and wanes - do you see anyone in China handing over their wallets to the Chinese authorities?
6) Lack of Chinese mining creates downward pressure on price. REAILITY: New entrants enter the market like New Zealand with excess hydro power. So this is not an issue.
Current State:
1) SOPR is currently greater than 1. Spent Output Ratio hasn't peaked and its not negative.
2) HODLíng is evidenced by the fact that the Percentage of Coins in Circulation that have NOT Transacted for more than 1 Year has actually increased from recent lows, although obviously there have been sells in the prior rallies and price tops. Recently that percentage has steadied and turned up! It's certainly not at a historic low point to mention it as a catalyst.
3) Breakeven trading on Price rally has slightly occurred, but that was at the top of the range - not a 'sell at market' - > panic.
Why Volatility?
1) Firstly, is this a flash crash? Well, what is the definition of a crash? Certainly one day price moves have been larger, so in that context - it's not a crash!
2) Selling at market drives price down - that is, 'hitting the bid'. Long traders exiting underlying positions absorb supply - they don't add to it!
3) Leveraged longs selling at market, automated stop losses from future programmes, no circuit breakers, no Order Book regulation, lack of Central Order Book, lack of spoofing controls using APIs etc., exacerbate volatility - that's just common sense.
4) Platforms going down not allowing traders to unwind position, future brokers selling underlying in hedge programme exacerbate a reflexive response to further exacerbate the situation. It has happened previously, and volatility will occur again - given the current state or order books decentralisation, regulations etc.
Next Steps
1) I am long and holding. Price topped-out at the top of a range and lows bounced-off swing traders costs basis - so there was buying at that level.
2) The market 'stabs' down i.e. probes the Order Book to the downside - it is normal to have further downside moves, but - check if down moves are accompanied by a pick-up of volume (selling at market) or due to lack of buying pressures - there's a difference!
2) Manage your risk by margining exposure to risk - don't use leverage (common sense, cryptos have plenty of volatility to make money) - greed doesn't pay!
3) We have seen larger moves in BTC and DOGE etc., this is not a unique position - so don't frame it as one ... just yet!
Discussion
It's been amusing reading analysis from so-called experts on Reuters and Yahoo finance. The Youtube videos by 'gurus' are not funny, they are just plain sad!
So let's look at some of the arguments from the VSPs (very serious people):
1) the so-called 'crash' was caused by Hash Rate failure. REALITY: Hash Rate as indicated (refer chart) has not materially declined - unless the data is wrong - there is no sign that this explanation is correct.
2) Fiat Currency is destroying BTC in order to teach El Salvador a lesson. REALITY: What evidence is there that the price move is materially different than what has already been experienced in the recent past? Do these VSPs check-out a daily price chart? (refer yellow box indicates a larger move)
3) It's a sad day when the Youtube gurus trade the past, and do it sooo badly they even confuse the dates. One minute they are in the future using past information, the next minute they seem to mix the dates of volume vs price as if one leads the other, but they are actually pointing to the sell off bar its - it's like the worse of the worse. REALITY: Time travel is not yet possible.
4) Panic to regulation and taxation. REAILTY: Actually most countries have property ownership laws and taxation on gains . Property laws protect consumers, and taxation normally affects only the HNW investors, who usually manage their affairs to avoid tax.
5) China has banned cryptos . REALITY: China has banned margin FX for years and yet the industry still exists. Chinese regulation waxes and wanes - do you see anyone in China handing over their wallets to the Chinese authorities?
6) Lack of Chinese mining creates downward pressure on price. REAILITY: New entrants enter the market like New Zealand with excess hydro power. So this is not an issue.
Current State:
1) SOPR is currently greater than 1. Spent Output Ratio hasn't peaked and its not negative.
2) HODLíng is evidenced by the fact that the Percentage of Coins in Circulation that have NOT Transacted for more than 1 Year has actually increased from recent lows, although obviously there have been sells in the prior rallies and price tops. Recently that percentage has steadied and turned up! It's certainly not at a historic low point to mention it as a catalyst.
3) Breakeven trading on Price rally has slightly occurred, but that was at the top of the range - not a 'sell at market' - > panic.
Why Volatility?
1) Firstly, is this a flash crash? Well, what is the definition of a crash? Certainly one day price moves have been larger, so in that context - it's not a crash!
2) Selling at market drives price down - that is, 'hitting the bid'. Long traders exiting underlying positions absorb supply - they don't add to it!
3) Leveraged longs selling at market, automated stop losses from future programmes, no circuit breakers, no Order Book regulation, lack of Central Order Book, lack of spoofing controls using APIs etc., exacerbate volatility - that's just common sense.
4) Platforms going down not allowing traders to unwind position, future brokers selling underlying in hedge programme exacerbate a reflexive response to further exacerbate the situation. It has happened previously, and volatility will occur again - given the current state or order books decentralisation, regulations etc.
Next Steps
1) I am long and holding. Price topped-out at the top of a range and lows bounced-off swing traders costs basis - so there was buying at that level.
2) The market 'stabs' down i.e. probes the Order Book to the downside - it is normal to have further downside moves, but - check if down moves are accompanied by a pick-up of volume (selling at market) or due to lack of buying pressures - there's a difference!
2) Manage your risk by margining exposure to risk - don't use leverage (common sense, cryptos have plenty of volatility to make money) - greed doesn't pay!
3) We have seen larger moves in BTC and DOGE etc., this is not a unique position - so don't frame it as one ... just yet!
