My view and analysis of CURRENT CRYPTO MARKET situation - SHORT TERM expectations
INTRODUCTION
The recent week has brought quite a lot of emotions for all of those, who are involved in the crypto space. Exactly 7 days ago, we've all witnessed huge FLASH CRASH. One that brought the price of bitcoin down from 51k USD all the way to around 43k in just a matter of "minutes".
This massive drop has been very rapid and brutal. And it left so many over-leveraged investors with their positions being liquidated. Which is quite a painful experience.
It is estimated that $4 billion was liquidated within several hours. THAT IS HUGE!
I've spent some time trying to understand what could cause this flash-crash and figure out what to expect in the nearest future. Allow me to share my view with all of you and if anyone thinks I'm wrong - please do not hesitate to share your own view with me in the comment section below.
Most valuable feedbacks will be rewarded with JUICY UPVOTE :).
So please, continue reading.
WHAT HAPPENED on 7th of September?
I presume, that by now pretty much everyone is well aware of El Salvador accepting bitcoin as a legal tender. They are the very first country, which decided to go full-on against the current world monetary system by bringing those friendly crypto regulations into life. And for many investors, this sounded like a piece of amazing news.
And yet, the crypto market crashed the very same day. Which doesn't really look like a coincidence. Rather, it seems to be a very well-planned and executed "dump".
Many people seem to believe, that "EVIL" governments together with central banks were behind this flash-crash and they timed it well to bring attention away from El Salvador on its big day. And to some degree, I would agree with that theory. But ... obviously, there must be "but".
PAINFUL LIQUIDATIONS
Analyzing different data (which are available since Bitcoin is a transparent ledger) and listening number of youtube podcasts allowed me to understand the scale of HYPE which was associated with recent El Salvador friendly crypto regulations coming into space. I honestly don't remember when was the last time I've seen so much optimism in that market.
And it seems that many investors decided to over-leverage themselves. Betting heavily that the price of bitcoin will "go to the moon" once mass media will pick on that news related to Salvador. At the same time, it created an enormous opportunity for some "whales" to earn those few billions - simply by rapidly dumping their bitcoin and other major altcoins.
They achieve it by creating instant rapid selling pressure. One that caused many BULLS to have their over-leveraged positions automatically liquidated. Before they even had a chance to react. And the number of over-leveraged and super optimistic investors seemed to be higher than ever before.
And we can see how it all ended for them.
DeFi and LEVERAGING OUR POSITIONS - how does it work?
It's becoming clear to me, that more people must educate themselves in that area. I strongly believe, that everything has changed since DeFi became a thing and traders need to take into consideration that similar flash-crashes will continue to be happening in the future.
I'm myself still trying to wrap my head around it, but the way I see it (correct me if I'm wrong) is as follow:
If I'm an investor who purchased some Bitcoin, then I can use DeFi to get more stable coins while using my Bitcoin as a collateral. In a way, I'm "borrowing" more stable coins, which then I use again to purchase Bitcoin. Just to do it over again and again.
Simple, right?
And I could use this newly purchased bitcoin (which I bought using "borrowed" stable coins) again to borrow more stable coins and to purchase even more BTC. Over-leveraging positions, while assuming that I will GET RICH QUICK if the price of bitcoin will indeed grow.
Am I making sense so far? Is that the correct way of looking at those things?
So ... what would happen is I'm wrong? If the price of Bitcoin would plummet?
In that case - my positions would be simply liquidated. I would lose ALL my invested and leveraged funds. All of it. Which would mean, that regardless of my optimism towards the future of bitcoin - I would no longer have money to invest. I would become a USELESS BULL.
And millions of BULLS across the globe end up in similar positions. After all, 4 billion USD which belonged to those BULLS were wiped out. And it will obviously take some time to recover that loss. This buying pressure will not come back anytime soon. It's simple as that.
WEAK HANDS vs STRONG HANDS
Let's focus on more positive aspects for a moment.
According to Anthony Pompliano(one of my favorite market and crypto commentator), 93% of BITCOIN has not moved in a month. This is massive!
Supply held by long-term holders (so-called STRONG HANDS) is pretty much at All-Time High. If we look at this metric within the past 2 years, we would come to a simple conclusion: never before more investors with long-term HODLing timeframe would HODL bitcoin.
It's simple as that: currently, pretty much NOONE IS SELLING.
So why is the market currently not moving up? Are we stuck in another long-term "consolidation mode"? Allow me to share my view:
THIS TIME IT'S DIFFERENT - SUMMARY
In the past, we've seen a number of rapid crashes, followed by solid bounce-back (most of the time). However, if you look at the graph above you will notice that this time it's different. And one can wonder: why we didn't witness typical heavy bounce-back since selling pressure is almost non-existent ?
Hopefully, you've read part "DeFi and leveraging our positions" where I've explained my view and understanding on how over-leveraging and massive liquidation can affect the market and investors.
I strongly believe, that it's crucial to understand the major difference between flash-crashes which were happening in the past and the one we're witnessing now. Back then we would mostly experience the wave of PANIC SELL caused by so called FUD (which would start with some awful negative news). Back then, investors simply had a chance to move their funds either into stable coins or withdraw to FIAT. Without losing those resources. Knowing that they can re-invest them in the future.
Back then, DeFi didn't exist yet. Investors couldn't leverage their positions, while creating extra buying pressure since the large amount of Bitcoin is being purchased with those borrowed stable coins.
In other words:
currently, a huge part of buying is happening only thanks to investors, who use DeFi to leverage themselves (using their BTC as collateral). And to get more stable coins which would be then used to buy more Bitcoin. How simple and dangerous it is?
Once such a huge liquidation happens - all that buying pressure is completely wiped out. At it may take some time (or some massive positive news) to recover trust of those who lost their entire investments.
Therfore, I would expect long accumulation phase now and market movings sideways for upcoming weeks. At the same time I do not think price of Bitcoin has potential to move much lower below current price levels. So all we need is PATIENCE.
RESTEEM and COMMENT
Hopefully, I'm making sense. Share your view with me and let me know if you agree with my line of thinking or not. I read and appreciate all your valuable comments (juicy upvotes awaiting)
Yours, @crypto.piotr
Founder of Project.hope community
Important lessons from this:
Don't Leverage Trades. Debt doesn't hurt you in the good times, it kills you in the bad.
Also, finance is about relativity. Everything is relative to something else. Crypto is relative to the amount of fiat and fiat credit/debt that's in the system....just like any other capital asset.
Even though crypto is taking a larger market share of total global capital assets, it is still a guppie in shark infested waters (these numbers need updated, but the lesson is the same).
And the reason crypto gets knocked around so hard, is because it is only around a 2 trillion dollar market cap, in a system that is notionally worth at least 1 quadrillion dollars.
What is going to have the biggest influence on crypto, including DeFi, is how central banks influence global money supply and credit.
Even though we all think that crypto is the coolest thing since the internet...the global fractional reserve banking system has incredible influence on what direction crypto goes...both in policy and money supply.
I've been hoping to see your comment @fijimermaid :)
It's however shorter than I expect. Usually your comments are 2 pages long ;)
It's hard not to agree. I found it very tempting to use DeFi to actually get more stable coins and purchase more BTC. But I resisted this temptation. And I'm glad I did.
ps. thanks for sharing this link. I wonder what "derivatives" are. I actually never heard this term before. How strange is that ....
Appreciate your feedback buddy,
Cheers, Piotr
LOL...2 pages long...that is so funny and true.
Derivatives are assets that derive their value from some other asset or income...like mortgage-backed securities. The vast majority of derivative assets are peer-to-peer (created and traded between institutions) and not transparent.
Crypto has derivatives as well. Technically, stablecoins are derivatives..because they’re value derives from fiat value...and hopefully secured with collateral protected from volatility.
Hey whats up Ive been day trading for my main income source the past 3 years and i have learned a lot but obviously noone can know everything. Heres my thoughts and it goes along with some of the topics you touched upon...
The main point of my thoughts on crypto is the idea of onboarding new users. Imagine up until the day you bought your first crypto... you never cared about crypto. But after you bought it you were laser focused.
Now crypto needs to go down after it goes up. this isnt just a get rich scheme people see crypto as a tool that is supposed to get them rich when thats not the case. thats just a byproduct of investing at the right time, but you cant say you got rich on crypto if you never withdrew any of your earnings... So you need to understand that people need to withdraw their money at somepoint...
Everyone rushes to try to blame the inherant forces of darkness anytime the market doesnt go in it's favor...
The trick is to realize that cryto always goes up and it always goes down. I try to sell crytp every week, but i usually set the money aside for the pure purpose of rebuying at specific points.
One crypto goes down its a great time to sell another thats up and buy that one, as long as you have researched and feel internally that its the time to buy.
the problem today is everyone wants to copy everyone else. so when one person says things like stonks and stuff on instagram, they just will instantly buy dodge and say theyre crytpo masters,
These are almost always the same people who will lose 10 bucks and cash out.
So when the price is up 95 percent every 10 days for a month straight, you need to realize that it takes time to convice NEW people to invest. so if everyone stops buying dodge at 50cents and says im not selling till 10 dollar moon, then the price will not moon cause everyone stopped.
Idk this is probably a crazy rant but just my two cents....
if 60 - 50 in minuits scares u... then u NEED to sell. and hold that money, beccause it is gaurenteed imo that it will be happening again soon.
Its not an evil force screwing ppl over. its people taking their profit and waiting to buy back later.
hello, @crypto.piotr,
this is an interesting topic, I think that although "el salvador" managed to approve a regulation, the truth of the matter is that this country does not have the technological infrastructure to make BTC a legal tender, also international bodies do not approve this decision of "el salvador", I remember seeing in the media that a street food sale accepted BTC, my question when I saw this was how do they pay the network fees that are more than $ 20? I think this kind of actions only seeks to inflate prices and then leave thousands of investors without their money, I personally believe that if BTC fails to scale further in the digital economy (buying and selling products), other currencies will gain more and more ground and eventually, BTC will become a sentimental reserve currency, in other words only those who love the project will have BTC, they will under no circumstances sell their btc no matter if its value reaches zero.
Hi @trabajosdelsiglo
Infrastructure can be build, once there is some clarity in regulations. I would say that it's better to make a bitcoin a legal tender and then work on building infrastructure than doing it other way around (infrastructure first and then regulations).
Based on my understanding, they are using second layer to do that. Which makes transfers cheap and fast. Correct me if Im wrong.
Cheers, Piotr
hello @crypto.piotr,
As I understand it, in that country less than half of the population has access to a good Internet, on the other hand the purchase of equipment such as smartphones or computers is not something that the common citizen can afford, from my point of view if a country wants to implement a serious regulation the first thing to do is to lower taxes on imports of technology, this will allow citizens to access technological resources that allow them to create the necessary infrastructure for the currencies to be implemented as legal tender, In short, if a country allows the free convertibility of currencies into fiat money, without first massifying access to the technology, it will only serve to allow the mafias present in the country to launder money without any control, I imagine that this is the fear of the big central banks that are not willing to accept this decision of the "saviour".
I hope my answer makes sense, best regards
hi @trabajosdelsiglo
I appreciate your comment. However, perhaps you could consider using some "enters" to separate different parts of this message. Reading such a long block of text is just ... not easy. Especially since you didn't even use "." and it's all like one super long sentence.
thanks for the suggestion my friend, I wanted to transmit a lot but I think I still don't have that level with English.
Hi @joshh71390
I don't think we had a chance to get to know each other and it may be my very first time I'm reading your comment.
When you mentioned that you've been daytrading - I expected to see some content related to it being published by you. However, it seem that you don't post about those kind of topics?
You've nailed it. It's hard to claim that we've earned anything, until we learn to take profits. I've learned it hard way in 2018.
I don't think "blaming" is what everyone does. Based on my experience, many investors are focusing their efforts on understanding possible reasons for pumps or dumps happening. And they are doing their best to adapt their strategy to those events.
I enjoyed your crazy rant :)
Let me also add: those few years (since I joined crypto space) touch me that whenever greed is sky rocketing and confidence towards future price (either it's trend upwards or future drop) would be very strong -> that is the time when some large players would go against it. Knowing that many investors over-leveraged themselfs. Knowing that by triggering those liquidations they will transfer enormous amount of wealth from over-leveraged people to their own pockets.
Hope I'm making sense.
Have a great weekend ahead of you,
Cheers, Piotr
thanks for your response I dont really talk to much about trading openly for a few reasons.
One if someone isnt directly asking you something about crypto trading then people arent very happy to take your advice ive learned.
and 2. i think i might have tried a few times back in the day to make some posts and I was blacklisted by markymark so i nevver posted about it again.
but long story short heres the type of trading Ill do. Tron compared to last week is up. I bought a good ammt back when it dipped to 0.07 cents because i had sold some at 0.09.
I was waiting and lastnight i saw tron hit 0.118 on poloniex.org which is one of the tron dexs.
So i sold 10k trx for 1180 and sure. the price will probably go up before it goes down. but from my previous experiences ive learned to not get so one track minded that it has to go one direction right now and I can wait for it to go back down to the 0.09s or 0.08s . for a quick easy 20 / 30% gain and while I wait for that to happen i do other things like this post. work on my javascript skills all of that good stuff but the trick is just to not have that ohh im gonna be rich / ohh the illuminauty is trying to bankrupt me. just have that I know the price will go up and down eventually mentality and wait for it.
long story short always just make your next move off the last one dont keep making a new strategy every day because u didnt get rich in one day ppl find a method that works for you not just some youtube video that you saw and need to emulate. Do things because you personally understand the logic behind your ideas and if you were a 10 year bull on btc dont let 60 minuites of priceaction change your ten year outlook on the currency
I've learnt a lot from your post thanks much.
Thanks @joshh71390 for being so responsive
I appreciate it greatly.
I'm sorry to hear that. Themarkymark is a very unique and aggressive user. Best is to avoid him at all cost.
Are you a programmer yourself?
ps.
Allow me to introduce you to our recent partnership with small korean team of developers. I'm helping them to get some exposure to their upcoming project.
Check it out here: https://steemit.com/hive-175254/@crypto.piotr/finally-i-m-safely-back-to-malaysia-with-new-ideas-and-partnerships-coming-must-read
Cheers, Piotr
well its been my main focus Im a jack of all trades but i think ive been skating around the idea of JS development for so long... I have always been able to get stuff running and make little changes. but ive been trying to put atleast 3 hours a day just to javascript tutorials. I actually run -> steemegg which was my first little project.
I have noticed you have been rebuilding some of the old infastructure and I want to make some big moves its just hard when theres such little other development.
Hi @crypto.piotr first of all I want to tell you that I'm really happy for your change of life.
It's a brave choice especially in this period of chaos both because of the pandemic and the general situation related to cryptocurrencies.
WoW, well done!!!
As for your post it's really a lucid view of the whole situation and I finally understood better the btc crash.
I love DeFi and all the opportunities it gives to invest and grow our earnings.
However, I think that even if we have the opportunity to invest by borrowing through the guarantee of the btc we hold by going into debt as you explained, to buy more btc, it's not said that we have to expose ourselves to the point of having to lose everything.
We can also invest in crypto more safely or we will have to learn to live with these violent btc crashes.
And then, there has also been a hand of institutional investors who have been trying to manipulate the crypto industry through FUD since they started investing in this market.
I think they tried to create problems for El Salvador and all cryptocurrency supporters.
Maybe they wanted to give a warning to discourage other countries to follow suit.
Certainly everything that's been going on these past few weeks is making me realize that the cryptocurrency sector is stronger than ever, and bitcoin is proving that it deserves all the space it's getting in the financial industry.
Thanks so much for sharing your thoughts on this situation with all of us.
Dear @mikitaly
Great to see that you're still around. Thank you for taking the time to share your thoughts with me.
ps.
Allow me to introduce you to our recent partnership with small korean team of developers. I'm helping them to get some exposure to their upcoming project.
Check it out here: https://steemit.com/hive-175254/@crypto.piotr/finally-i-m-safely-back-to-malaysia-with-new-ideas-and-partnerships-coming-must-read
Cheers, Piotr
Hi @crypto.piotr,
Thank you for your inspiring reviews on the crypto market.
I think the flash crash was related to technical reasons. Let me explain my views on the topic.
Fibonacci retracements are used to measure how far the price will retrace after a trend. Prices usually retrieve 50% or 61.8% of the level at which they rose or fell. 61.8% is also known as the golden ratio.
Bitcoin entered an upward trend when it was at the level of 10k in October 2020 and reached 63k levels on April 14, 2021. This uptrend resulted in a 61.8% pullback as seen in the chart below.
As a result of the downward trend between April 14, 2021, and July 20, 2021, the price of Bitcoin decreased to 29k levels. The price rose again with a 61.8% correction, to 53k.
We have been in a consolidation period since September 7 and we wonder how much the correction can be. If the price corrections by 61.8% continue the Bitcoin price regress to the level of 38,5k. However, after the two Fibonacci corrections, a third major correction may not be needed as the prices approached the fair value.
Conclusion: I suppose September 7 crash was the beginning of the third Fibonacci correction in a row, but we don't need to pull back to 37,5k. I think that the upward trend that started on June 21th will continue.
Dear @muratkbesiroglu
Wow. I love that comment. Thanks for taking the time to read and share your thoughts. Upvote on the way :)
Im not much into TA, however I do watch several channels where people smarter than me are talking about it. And TA (in my opinion) did not allow to predict such a rapid flash-crash.
TA do not do well when we face massive market manipulation. That's obviously just my own little opinion.
Cheers, Piotr
Hello friend @crypto.piotr
Without a doubt, the past three weeks have been very marked by emotions within the market of the criptomonedas, many may have taken advantage of the recent high volatility, which has been developing specifically the BTC, in relation to the Flash Crash you mention is something that repeatedly tends to make the Bitcoin, and that is one of the reasons why our trading capital should be at a high percentage in stable currencies in my case I use USDT, also don't go buy when the price is in the areas of distribution (sales area) as a matter of fact was the BTC in the 53K, the price was expected to collapse to the more solid previous support.
I agree with you with those of planned and executed, the market is highly manipulated, so I think that when large corrections come, or upward exits in a strange way they coincide with news such as those of El Salvador.
Best regards, good luck.
Appreciate your comment @lupafilotaxia
What is "criptomonedas"? Im not sure what does it mean ...
Flash crashes (or pumps) are natural part of bitcoin behaviour, however it is important to understand that reaction to those flash-crashes may be very different now. Comparing to old days. Because of those over-leveraged investors and mass liquidations which are happening.
That's something quite new.
Have a great weekend ahead of you,
Yours, Piotr
Hi @crypto.piotr if there are important points i've got from your post i would say its leveraging i guess you have been making emphasis on over leverage for quite a while now and its very important.
One thing that has always been certain in the crypto space is market moves in either up or down direction but a sudden crash always takes investors by surprise.
Its quite obvious to note that the sudden crash has been from strong hands who wanted to take advantage of the bull most people are driven by greed in the market and with the long awaited news of El Salvador most investors decided to open a trade with high leverage betting price will go up.
This was capitalize on and turn out those with strong hands sold out just to buy back while others are waiting for price pump.
Thanks for sharing with us stay bless.
Thanks for dropping by and sharing your thoughts with me @mccoy02
Appreciate it :)
Świetny post!
Niedzielni inwestorzy kupowali bitcoina jak szaleni, bo newsy o Salvadorze trafiły do mainstreamowych mediów. Nawet znajomi mojego ojca, którzy jeszcze miesiąc temu nie wiedzieli co to kryptowaluta, kupili jakąś ilość bitcoinów z nadzieją, że się szybko wzbogacą.
Po tym jak Bitcoin gwałtownie spadł, jak mówisz "nikt teraz nie sprzedaje", ale odnosi się to do doświadczonych osób. Jestem przekonany, że dziesiątki tysięcy niedzielnych inwestorów sprzedaje nadal swoje drobne bitcoiny w panice i to może być jedna z przyczyn dlaczego cena nie wzrasta zbyt szybko.
Bitcoin, jak i crypto ogólnie, im bardziej popularne, tym bardziej są sabotowane i nie ma w tym nic zaskakującego. W czasach kiedy BTC spadało, nie tylko Salvador protestował, że nie chce kryptowaluty, ale w UK prezesi banków mówili w wywiadach, że BTC nigdy nie będzie na tyle stabilny by był uznany za normalny środek płatniczy, a w Szwecji premier porównał kupowanie bitcoinów do kupowania kolekcjonerskich znaczków pocztowych. Do tego doszło jeszcze zamknięcie kilku kopalni w Chinach, które już od dłuższego czasu przymierzają się do stworzenia swojej państwowej kryptowaluty i kto tam wie co jeszcze...
Ataków będzie coraz więcej, ale myślę, że BTC będzie miał się doskonale, mimo wszystko. Jasne, jak mówisz - z tąpnięciami (przypuszczam, że największe będzie jak BTC osiągnie pułap 100k), ale będzie dobrze.To znaczy, przynajmniej do momentu wynalezienia komputerów kwantowych albo do jakichś większych obostrzeń podatkowych, wynikających z jego nieekologiczności.
Czesc @papi.mati
Rzadko mam okazje przeczytac komentarz w jezyku polskim. Fajna odmiana :)
Dzieki za poswiecony mi czas i wartoscowy feedback.
Pozdrowka, Piotrek
hi @papi.mati
To jeszcze raz ja.
Jeszcze pozwol ze dodam (juz takie troche copy+paste po angielsku):
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Cheers, Piotr
Hello my dear @cryto.piotr One of the important points you make is the relationship between the news that in Salvador the Bitcoin is an official currency and the collapse of it, in my opinion these news certainly affect either positively or negatively, in this case the news was outlined as an investment opportunity, however, something that perhaps investors did not know and only people living in El Salvador or Central American countries is that this measure generates more poverty and a collapse of the domestic economy of these small countries which is reflected in these market declines.
It turns out that on the first day that it was announced that in El Salvador Bitcoin could be officially used, the government also mentioned that citizens could download mobile bitcoin wallets on their phones and pay in establishments, however, that day the wallet was not available to be downloaded to phones and small traders and people who do not have large incomes began a series of protests against this measure because according to them very few are those who know and understand the world of cryptocurrencies. Even from that same day in the central bank of El Salvador is announced on its home page the registration for Bitcoin service providers, but still many do not know how to do it or do not understand it, from there then it is not surprising that this measure that seemed at first to be encouraging for investors who decided to leverage and even use more Defi to acquire Bitcoin has generated a slight stagnation and subsequent collapse in the market. I differ with you friend @cryto.piotr regarding that "At the same time I do not think price of Bitcoin has potential to move much lower below current price levels." On the contrary I think that if there is a possibility that it reaches a lower level than the current one precisely caused by the pressure that at this time Salvadorans are exerting through protests to the government so that this measure is reversed and that creates distrust and panic in investors. Being positive, waiting is surely an option, but at this moment the pressure on the value and the rejection of Bitcoin generates chaos.
I tell you that in my country Venezuela is conducting a campaign by the government for education in Bitcoin in the country there is a digital currency or cryptocurrency that circulates internally and that the government has tried to implement officially called "Petro" but this is not accepted even in government entities even though public employees already receive payments in that cryptocurrency and in addition to that we were automatically created a wallet in an internal exchange platform of the country that can not connect with other wallets on other platforms and much less with state banks, here is a real chaos although the government tries to make us all adapt to the world of cryptoassets, however, more than 80% of the population does not have access to cryptocurrencies because there is no purchasing power for it and much less understand them, now do you think that what is happening in the countries of Central America and Latin America regarding the implementation of cryptoassets as official currencies will have a positive impact on investments in Bitcoins? Because I don't think so.By the way, I really like these interaction initiatives. You should consider having a weekly session with us just to discuss this and other community issues. Best regards
Thanks for the contribution i read an article recently about El Salvador crypto adoption the author was emphasizing on early crypto adoption he pointed out making bitcoin a legal tender in el Salvador was too early i think i agree with his points because majority are yet to understand how crypto currency works what is need now is crypto mass education.
Thank you for this lengthy feedback @emimoron
Just please, try to use "enter" more often. IT's very difficult to read such a long blocks of text.
It surely is going to take some time for poor country as Salvador (with little resources) to solve those issues. Let's keep fingers crossed for them.
ps.
Allow me to introduce you to our recent partnership with small korean team of developers. I'm helping them to get some exposure to their upcoming project.
Check it out here: https://steemit.com/hive-175254/@crypto.piotr/finally-i-m-safely-back-to-malaysia-with-new-ideas-and-partnerships-coming-must-read
Cheers, Piotr