Anyone who was overconfident about bitcoin at around $58,000 is either bombed out by margin or stop losses or at very least looking at their positions with a new more sober eye.
First things first. There are billions of profits to be made closing out stop losses and leveraged traders by smashing the price of assets traded by the novice in a “flash crash.” If you can smash the price and cause an avalanche you can make gigantic money. This technique has been pestilential in equities forever, it is even in 19th Century literature and is definitely a big thing in crypto. Don’t put yourself in a position that a 20% move can pump all your money into someone else’s pocket because it will happen. If parties can know or work out where the stop losses are or where the close out margin call levels are, they will drive the price in an instantaneous flash crash to pump those close-outs into their opposing positions making them a fortune.
Never trade on any platform you feel may be short, because they will drive long stops to close those positions. That is totally illegal in equities. In crypto? Not so much.
If you are a centralized exchange with no ethics you can sell people as much crypto as they want to buy and back it with very little real crypto. Centralized crypto platforms are “fractional banks” just like your fiat bank. When it says you own 1 BTC, that is an accounting number, not actual BTC. The 1 BTC is a number in an accounting database not on the blockchain. The platform could have spent, stolen, rehypothecated the BTC you put in months ago or bought with “fiat,” but as long as customers don’t withdraw more than their actual balance, you will never know until the message on the front page says “byeeeeeeee.” Or we’ve been hacked, sorry, or some such other explanation, other than we spent it and our wallet is empty. The equivalent of “bank runs” on exchanges that were short crypto in rallies, has closed a huge number of exchanges over the years and it’s an easy trap for them to fall into, a hard one to escape and the mother of many “exit scams.”
If you are a centralized exchange, you have all kinds of banker-style options beloved by felonious Wall Street. They can put your—that’s yours’ not theirs’—token balances on Aave or some funky yield farming site in an attempt to get 10% interest for themselves on your balances. On aggregate that is a ton of money they can make. It’s probably legitimate to do so, too from a legal perspective, but how would you feel to know your balances were out there somewhere not in your trading platform’s wallets but in hack-prone DeFi?
This is just to say, centralized platforms have a lot of tools, currently unregulated, to make money at your expense or at best, your risk. Many will take advantage of that and those that are ruthless will go for the jugular of overleveraged players and the stop loss levels of others.
Those multithousand-dollar spikes that keep popping up on BTC, they are highly likely to be stop drives and they will fill platforms’ shorts by pumping BTC out of your accounting balance into theirs without ever touching the blockchain.
Markets treat gamblers in the same way as casinos do. Beware.
So here we are with a market full of gamblers. That in itself is a very bearish signal.
Thirty thousand dollar on bitcoin was always going to happen, $40,000 was quite likely, $60,000 not very likely and $100,000 will take an amazing piece of market mania to reach.
You can see me on all my articles over the last year doing a reasonable job of calling this market and anyone that followed my logic would be sitting very pretty.
The strategy was to get out of BTC and into DeFi and anyone who did follow that logic should send me a case of whiskey for Christmas (just kidding). Some of those tokens have gone x5, x10 and not many have not gone up 2 to 3 times….