Bitcoin Hit an All Time High! Then Collapsed (Taking the Market w/ it), Here’s Why We’re Not Worried…

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Bitcoin hit a brand new all time excessive of $69,093.28 (hoooray)!

Then promptly collapsed again all the way down to $59,323.90, taking the remainder of the market with it (booo)!

Right here’s our left-curve try at ‘mid-curving’ it, with a guess at what occurred:

The longs took earnings, whereas the shorts loaded up.

(Take a look at us, speaking the mid-curve discuss).

Right here’s what which means:

Longs taking earnings = the parents that had been betting BTC’s value would go up determined to promote.

Shorts loading up = a complete bunch of parents took bets that the worth would go down — by: borrowing BTC → promoting it → and ready/hoping to purchase it again at decrease costs → repay their mortgage and preserve the distinction.

“Cool cool cool. However how is it that all of them determined to take action on the similar time?”

Merchants wish to bolster their choices, by on the lookout for repeating chart patterns.

(I.e “BTC has accomplished X round this value level previously, so there’s Y% probability it’ll occur once more.”) 

However as soon as BTC broke its all time excessive, we have been in uncharted territory (with no patterns to maintain merchants secure n’ heat) — so, lots of these with lengthy positions would’ve offered off at $69k.

Then, understanding that this is able to doubtless be a extensively held follow…

Lots of those self same merchants would’ve arrange automated brief gross sales to set off on the similar value level — resulting in a double whammy of lengthy/brief gross sales which (nearly instantly) tanked the worth.

As to why we’re not frightened?

In February, Bitcoin noticed probably the most value appreciation in a single month in its total historical past. That’s a WILDLY violent new document for a ~$1T asset to set.

At these charges, a value correction was effectively over due (and when it rebounds — the remainder of the market will doubtless observe).