Sherem

The Cartel, Manipulation and what it could mean for BTC prices

Long
BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
This is going to be a rather lengthy post and you can take it for what you think it's worth. I have heard a lot of talk lately about a "cartel" being out there and manipulating the price of Bitcoin and other things. I want to look at the reason WHY any price manipulation would be happening. I also want to look what I feel are possible outcomes. My goal is to hopefully shed some light and understand the why behind things and to gain some PERSPECTIVE on your trades. Then we can make decisions from there on what we want to do.

Firstly, you need to understand that a lot of companies have a hugely invested interest in crypto now that the space has matured over the last 10 years or so. I am not talking million dollar companies. But these are now BILLION dollar revenue CASH COWS collectively. From brokers, miners, mining companies, etc... It's in their best interest's not to let the price fall off the face of a cliff . It was estimated that coinbase made 1 billion alone last year. If crypto goes too low, they lose customers and in turn they lose their MILLIONS in revenue every month. To let Crypto die is NOT in their best interests. We need to understand that fundamental principle.

The notion that CME caused that crash is kinda true, but for the wrong reasons. Crypto is about free market and anti-regulation. CME getting involved means regulation, banks, people who are the antithesis of crypto getting involved. All those early adopter crypto folks that were holding and saw that said, "Eff that, i am out" PLUS, how many MULTI millionaires were made at BTC 19-20k? A LOT. Price was just way to over valued. Before CME there were brokers that allowed you to short the market, look at this chart on Bitfinex, people were shorting it last year, well before CME came out. The only thing that CME had to do with the crypto crash is they were simply entering the space. That's it. That's all it took to make people bail on their positions. If there is one thing for certain, CME is NOT cartel just the scapegoat. People were shorting this thing well before CME got involved.

In my opinion any group of people or "cartel" could range from a lot of different organizations. The goal here isn't to get into an argument on WHO it is, but to see WHY they would potentially be doing this. Now, why would a "cartel" be manipulating price to the downside?
A. They want more assets at a lower price point. A group like this would want this so they can load up at lower prices so they can dump it again and make a ton of money.
B. To accumulate cheap crypto. Organizations probably are loading up right now so they have reserves so people can buy, short, trade, etc... The lower price, the better to build up reserves. See, they don't care if crypto goes to 4k, they load up anywhere that it's lower.
These large brokers make money whether crypto goes up or goes down. BUT, if you go to low, people lose faith in crypto and these companies lose money in the long run. A group probably is influencing price, but they don't need to continually do it. People in general are. "Cartel" just starts the process. All that had to be done was spread FUD at specific times to light the match of the self generating fire. Look at the chart of BTCUSD shorts . They keep increasing dramatically, why? People are buying into the FUD, but fundamentally crypto is only getting better. I am not here to tell you whether BTC is overvalued or not, that's an entirely different debate. The question I have is price action and risk. Why on God's green earth are people shorting it at these 6.5-7k lows? The risk-reward ratio is just not there IMO. Some are just hoping for the spike down and have a limit and have a tight stop, great! But why are we at this massive high in shorts? Do people really believe bitcoin is going to 0 with billion dollar companies backing it now? With some influential people behind it? If you do, god bless you for believing that. Continued below....
Comment: How would you perform the 2 scenarios I outlined above? How they would do it IMO:
1. To institute a crash all you do is sell a bunch of coin at certain points and spread FUD at key points. You make people believe they will make money by shorting it and continuing to short it. The sheeple will do the rest and drive it down on fomo and GREED.
2. The shorts weren't really in place at this previous 6k low. Not enough. But they are now. People will slowly get margin called and slowly close their short positions out to drive the market higher. Look at what happened in 2016 when we had this many shorts. BTC went from around 4-5k to almost 12k!! It took around 2 months to do it.

We have all heard the FUD, banning crypto, regulating it, etc....If the government wanted to shut it down, it would be, plain and simple. But it's not and the SEC has all but given it's blessing. We have heard so much it makes your head spin. But now we are seeing articles like "George Soros does 180 and is starting to invest in crypto" "Why i am a believer in crypto", etc, etc... Is sentiment changing, is someone behind it? You be the judge.

Another thing, people aren't giving enough credit to the coinbase announcement. It wasn't his "venture fund" that was the news. Did you listen to what he said before hand? They are getting instruments together so institutions can enter the playing field and they already have an INDEX created. They have everything in place so BIG money can enter. I heard through the grapevine last week about a VC firm talking to a large crypto fund about investing in it. The CEO of Coinbase basically said NEW BIG MONEY IS COMING. Large firms take time to get in. They have committee's and bosses and crap they gotta do before they can enter the market.

One of the hardest things for any trader or investor to do is time the market with absolute precision 100% of the time. The goal of this post is to NOT pinpoint when the market is going to turn, but to tell you that there is little reason for it go to to hell in a hand basket. I believe we are going to be rebounding, I just don’t know WHEN precisely and how high we go.

Let Analyze the charts I posited briefly:
Blue Line - BTCUSD
Pink - BTCUSDSHORTS
Orange – BTCUSDLONGS

BTCUSDSHORTS and LONG both went down in tandem from Oct-December while crypto went from roughly 5k to 12k. We are now at these highs again in shorts and longs. Oh and we just so happen to be around the precise btc price level where the longs and shorts were high and went down and crypto blasted off. Coincidence? In my mind we are going to get a rebound, the question is just WHEN and how high it goes. We have potential to go to 11.5k and maybe higher. Do we go lower first before it happens? Remains to be seen.

If you are shorting BTC at 6.5-7kk, you have to ask yourself. Are you the genius that is perfect in calling something that has already moved down ~70% to go down roughly another 30%(referencing 6.5k to 4k)? Or are you the fool that is just getting used by the "cartel" to drive the market back up when they turn it to the upside? Is the price action putting in a solid floor where the large players are just scooping up cheap crypto or is it going to continue down? Hmmmm....

Those are my 2 cents and OPINION. I am sure you have your own. If mine added any value to yours please smash that like button to let me know.

Happy Trading,
-Sherem
Comment: TLDR: "Cartel" manipulated the market by getting people to believe the market is going down to 0 and having people continue to short it at these levels. (See charts) The reality is all the major players will prop crypto up as they make millions of dollars from it. "Cartel" is forming a base in crypto right now and will drive the market higher by squeezing the shorts out of positions similar to what happened in Oct of 17 with the run from 4-5k to 20k(thank you carlv2) Timing of when this happens is uncertain, it could go lower before it rebounds.
Comment: Short positions are increasing and BTC prices are not moving lower. It's only been steady because of this increase in ETH/BTC. Hmmmm, short squeeze on order already?
Comment: DAT SQUEEZE! Chart update:
Comment: We are approaching my zones from when I posted this originally, here is a possibility"

Comments

Excellent post sir!
+3 Reply
Finally, an analyze I fully agreed. Thanks Sherem.
+1 Reply
Great post! Very interesting read. Thank you for your insight.
+1 Reply
Lets hope. All the strong hands taking money from the week hands by shorting all the way down and reversing and reinvesting their earnings for the next ride up. Should make for a stronger market in the future. Know that's been my plan for the last few months. From a strategy view it make more sense than trying to pick the bottom, short with a trailing stop and when the reversal comes add on the next retracement. At the end of the day you have more bitcoin and don't have to worry about finding the bottom, just follow the market.
+1 Reply
great post, thanks, I must have missed it long ago....I belive yu are so right about all of it...I had just found tv in march....I have learned so so much....and a fair amount from yu….yu are one of my favorites consisistantly that I follow...
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Sherem AurieK
@AurieK, Thanks mate!
Reply
Thanks for posting your analysis. Appreciate your viewpoint.
Reply
Excellent article.

1) Sherem, does the CME actually own any BTC?

2) If yes, then was it the CME who was buying up BTC at $6k that drove the price up to almost $20k in just 1 month? Because this parabolic rise seems too unnatural for me to think it was done by the general public.

3) The CME likes to leverage their holdings. For example, they sell the same gold bar 100 times to 100 different individuals and make a killing because no one asks for delivery. They can also dump paper gold (or silver) contracts on the futures market in a single hour that amounts to the world's gold (or silver) production for an entire year, to drive the price down. This is all done with the blessings of the U.S. gov't because it prevents the U.S. dollar from collapsing.

Is this what the CME is doing with BTC? Because I just find it odd that BTC price peaked in December, the day before the CME starting trading BTC futures to short the price.

Thanks again for your excellent synopsis.
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the market cap has broken out of the down trend, I used a ruler on my laptop screen... so maybe you are right, the other hand it could be a fakeout
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Great read, thanks for posting
Reply
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