Is This The Flash Crash Before Uncertain Times
A few days ago I wrote not understanding why the market was rebounding and going sky high with how much uncertainty there was in the air about bitcoin and hard forks.
I figured we where in for 3 weeks of sell offers which ended up turning into 2 solid weeks of sell offs but then a week of rebounding which seems to have ended right now here today.
As of writing this Bitcoins market has dropped over 6% Ethereum over 8% and even litecoin (which has no negative news on it at all down over 6%
Bitcoin
Ethereum
Litecoin
Normally when there is uncertainty in the stock market a high number of share holders will pull out not risking their money for what might happen. This causes a flash crash in the stock as smart investors pull out large amounts first based on the uncertainty. This then causes your smaller investors to bail and take what profits or stop their losses causing the entire stock to crumble to new lows.
With a number of bitcoin exchanges about to lock up house for a few days or week during this uncertainty time happening Aug 1st. in just a week it is I believe causing people to cut and run. Your bitcoin is honestly about to be locked up and can't be traded till after the drama unfolds not something most people want to stick around and wait out.
However this could also mean huge profits for those who jump in on this sell off but it is a huge risk and one you really need to consider yourself before investing. As long as everything goes fairly smooth during this transition which honestly I hope it does then your eventually going to make profit I firmly believe.
But if this change goes side ways we could see the entire cryptocurrency market go belly up for a long period of time perhaps even forever.
There are a number of companies, governments, miners and people all vested into this being a successful change but there is always that small risk which puts the worry in my heart.
Additional Thoughts
Since Ethereum and Litecoin are on their own networks and block chains (more so litecoin) and these prices are falling on par with bitcoins it just goes to show you how heavily tied everything still is to bitcoin. You would think investors would instead move their assets over into a more stable coin during this period instead into one such as litecoin which recently went though a successful fork without splitting. Instead it seems like they are dumping out into fiat again.
Is this just because other crypto currencies are just not that well known yet or is it in fact that everything in the marketplace is centralized to bitcoin?
Good questions. There is so much speculative investment and people having no clue what actually gives value to these coins, that very heavy fluctuations might happen. I am one of the lucky ones who got bitcoin long long time ago and i have been rebuying a lot. My buyorders are standing now at 1900 which i think it might reach due to what you describe but there is so much buying power waiting for that price that i really don't think it will fall below.
A good point and one thing I forgot to check where the buy orders. That is a good trading tip to review those called a "wall" I always enjoyed the troll chats and how everyone always talked about buy walls and sell walls ah good days. Much success to you in your future trades!
oldschool btc investor?! You lucky duck
Great read. I was wondering why the sell off ended so early. I was expecting the sell off the continue until Aug. 1st or well beyond that. I'm curious as to what your thought is on the EOS coin, I have been looking at it a lot. The coin is relatively new so there's not enough info to do an analysis. But anyways, thanks for sharing you thoughts on this crazy time
Dan is behind EOS, same guy behind bitrades and Steemit so not to under estimate, Dan is a genius. EOS is meant as a better alternative to Ethereum. It is definitely better but that doesn't mean it will pass it in terms of market cap, it's all about support, marketing etc...
Yea, one of the reasons I started to look into it was because of Dan. I usually don't get into ICO coins too early but I felt like this one has good potential.
I honestly don't know to much about EOS, I hear a bunch of talk about it but one of these days I really need to dig into it perhaps that will be my next post ;)
That will be great, I will have to stay tuned then haha. I believe they will be at the Washinton blockchain conference and also the silicon valley fintech, not exactly sure how that will affect the price. Crypto is too speculative lol a good news from those events might just drive the price up. Followed you, staying tuned for your future post . keep up the good work sir.
EOS, as with all "untested" new coins is something I've also heard lots of good things about, but I'd be weary as I would with any coin that's been out for less than a year or so. What I've done is bought just a little bit (under $50) because you never know :) - leaving my larger investments for the big boys, mainly btc and then a bit of ltc, dash, monero, stratis...just a few of my favorites in case you were wondering hehe.
I will probably just put a little bit in it, if it moons great, if not then it doesn't hurt lol
I did the same already :) Good luck to both of us #fingerscrossed ...in the short run maybe we'll lose a bit but long term no worries!
haha best of luck for the both of us !
Resteemed! I don't think it will come close to $2K again, but don't quote me on that! Anyway I know there is still much uncertainty but I thought the fork was probably not going to happen...then again, after reading this https://bitcoinmagazine.com/articles/bip-91-has-activated-heres-what-means-and-what-it-does-not/ it seems like you are right, still tons of uncertainty. Still, moving to fiat sounds "safe" on the surface, but then again means they'll miss out on big gains - esp after Aug 1st as I suspect things will shoot up again.
Yup, still need to lock in more miners and not locking them all in means it will split but that also means 10% support the old coin and 90% the new. Interesting times still to come I think most people heard Bip 91 locked in and everyone thought they where in the clear.
Absolutely, makes sense - I admit I initially was one of those that thought it was smooth sailing from here on out...I'm still confident things will work out and the entire market will continue going up after the next week or so.
Also, I wouldn't call this a flash crash but rather a flash dip - it's still pretty small as of now and the market is still far higher than it was a week ago. Anyway I'm holding on to everything and feel pretty secure, even with the short term dip (and knowing it will likely dip further). I'm in this for the long run!!
This makes complete sense and good replies everyone.
Fairly interesting post and thoughts. i was caught by this one: This causes a flash crash in the stock as smart investors pull out large amounts first based on the uncertainty. i disagree, for the sake of productive discussion let me elaborate a little bit more:
Disclaimer: Although i have not the absolutely truth, i am also have not data-validated every single statement in the following sources, i think we can find a more coherent approach of why do flash crashes happens.
Reason: High Speed Trading: High speed trading fueled Twitter flash crash. Basically was because of week or not deep enough market microstructure, in other words the buy and sell orders are not enough or not smartly enough collocated, so cumulative effect is possible to be developed started by a simple big trade triggered artificially by an algorithm.
Reason 2: False Information: False White House explosion tweet rattles market But, again, there was a major role played by quick response triggered by algorithms, since the whole movement took less than 3 minutes, during lunch time.
And so there are other examples and data for support that hypothesis of the machines and algorithms, somewhat poorly secured and stress tested by humans and regulators. like this article The perils of program trading at Forbes, And this more eloquent post in resemblance to the "Too big to fail" lemma of the 2008 crisis, but now, reggarding to Algo trading Too Fast to Fail: How High-Speed Trading Fuels Wall Street Disasters
Conclusion
So, @bitcoinflood , I think your ideas of how about a financial market can and will be affected by fundamental news around it, are generally accepted, and, you see, precisely because of that exists panic and euphoria regarding the price of something in representation of its value, it does generally happens that people think like that. What comes to my mind is Daniel Kahnmean, renowned psychologist and Nobel awarded by his work on human decision making. In his prospect theory he has documented tests where people do weight more loses over gains, and that our decision process is far from efficient, also that we will favor premises that favor our previously and arbitrarily made conclusions that we liked, about something similar that already happened or that "makes sense" for us, instead doing the opposite and use a scientific approach: Gather data, make an hypothesis and test the hypothesis against the data to finally draw a conclusion.
I think you liked the idea of being able to explain a Flash Crash by what you know and whatever ideas you are comfortable with, "Smart people acting based on uncertainty", that could be right in other context, but you see my friend, in this particular one that idea is biased.
Thanks for the post @bitcoinflood because I definitely feel the same way.
In my opinion the jump and recovery was a big "dead cat jump".
Even though there is very much uncertainty in the market, when the price of Ethereum and Bitcoin got that low people just couldn't handle not to buy.
With all the pseudo good news and the thousand bitcoin proposals that 70% don't understand people thought they wouldn't see these prices for a long time and bought.
With the prices of BTC/ETH at this moment one may think they where right, but trust me they're wrong.
Short pump and dump for sure. Few hours later from post and we are down over 10% on most and tracking down. I think we will be seeing a sell off till we are more in the known about some changes here. If all goes to plan though I do for sure see bitcoin at $5,000 by years end or plus.
yep, yep, and yep. couldn't agree more with everything you just said.
Yeah this is not about pessimism about Bitcoin, its about recognizing the market. I would like to read more of these discussions :)
First off - upvoted & resteemed. BUT, there are a couple of HUGE angles your very well-written post is missing out on:
People involved in the cryptocurrencies are, on average, not your standard type of investors. Many of them are looking for an alternative to the dollar - not a way to make more dollars. They want to store their VALUE, not their FIAT. So, we could expect cryptos to be held onto more than other types of asset classes. We are not as likely to be "shaken out" of our investments as the average day-trader.
And, let me develop my point...
The Dollar is, by design, going to collapse under the weight of it's own debt - because it is a debt instrument. This is well-known and has been planned for by the Fed for a long, long time. When the dollar goes, so goes the Stock Market, the U.S. Government/Bonds Market, and a whole lot of other things based on the Petro-Dollar.
So, what IS the dollar - to the Fed? It is an instrument of CONTROL. Being such, and the banksters being what they are, you can be sure of one thing: they are NOT planning on losing control over the markets, or the World Reserve Currency. What they are doing is moving the WRC from the Dollar to... something else...
Additionally, banksters HATE cash, silver, and gold. It's because these are stores of value that are generally outside of their tight-fisted control & ability to accurately account for.
Also, we know that the NSA tracks every single piece of information over the internet. Every single piece. We may think we have privacy with cryptocurrencies, but that still remains to be seen...
Some people have theorized that BitCoin & cryptos, in general, were actually started or co-opted by the CIA. I have no idea how accurate these ideas may or may not be. But, it does make one stop and think. At the very least, nobody with even mediocre knowledge of crypto markets can make the argument that big money interests are not already actively involved in attempting to influence the prices of cryptos.
What better way to move people out of the Dollar, and out of Cash, than to transfer the wealth and control over the U.S. Dollar and place it into Cryptocurrencies? A medium where every single exchange can be tracked, monitored, and... TAXED.
Seems like holding actual, physical Silver & Gold will be our last form of CASH left to us. Their batteries won't run out, and they can't be hacked.
I see this same kind of speculation with every down-turn of the markets, no matter what kind of asset we're dealing with. Nowdays, everyone thinks "this COULD be IT !!!" And, inevitably, one of these times will be the big "IT !!!"
HODL !!! You'll look back, years later, and be very glad that you learned how to take a long-term view of cryptos STARTING RIGHT NOW. All of you people who are out there trying to take profits on these small gains are missing the point - stay in it for the long game (5 - 10 years) and your life will be changed, forever.
Anyone have other ideas?
I was wondering too why it is when Bitcoin goes down most other coin go too. I think it is bad that everything is still tied to Bitcoin. Hopefully, it changes in the near future.
When bitcoin lock-in have to build insecurity in market . that the reason behind sell flash within 12hours run . you can check out my post .
There is no reason for this down turn I think very powerful and rich people are playing with crypto currencies which might not be quite as independent and interference free as people seem to think they are. Why should all of these coins prices fluctuate according to bitcoins performance? I think something like ethereum has no reason to be influenced by Bitcoin, aren't these types of coins decentralized? So I really think other things are at work here.
In any case I think everyone should hold their Steem and see what happens after August 3.