Last nights bitcoin crash was tricky to spot coming because for once everyone reacted correctly to the whale signs pre crash. Mostly.
I was talking to another group member all day about it and we couldn't decide if it was going to go or not. There were whale signs on most coins like Neo, Lisk, LTC, OMG and most others also so it looked likely.
Note the timezone is New Zealand so it will look as though we are almost 1 day ahead to most people. (because we are)
But impressively most people sold on the whale signs. This is what you want. You want people to take profits on a whale sign instead of fear of missing out sell that whales pump away.
Here is an example of what people should do if the pump is fake and for manipulation only.
The red arrows are the whale signs. The blue are the dumps. As you can see the dumps were very small and not that effective.
Most pumps were sold off immediately. This is what you want. If you look at the 30min charts and sometimes the 1 min chart. You can spot when a whale buys in. This will also be the point of which the dump will exit. See the first arrow vs the last blue arrow.
Zencash was an example of not a great pump for the whale because they didn't dump at the peak (as they have to wait for the BTC dump before they start dumping). They were hoping to cause fomo and cause the price to go higher. This didn't really happen.
They may have bought in and sold out several times over that period still making good profit, it's hard to say.
Other coins I looked at whenever it got pumped by a whale it got dumped by the holders, so most coins survived the crash really really well.
LTC is an example of one that did not survive well. There is a few types of whale signs. A big green bar starting at a low point. This is the most obvious sign. Then if you look at the red/black arrow that is the second type of whale sign. Small pumps over a few hours to make it look more natural.
Then can see again more whale signs, perhaps a different one tries to pump it again but mostly fails which is what you want when you see this kind of pump with is no good reason for it. They try again as the BTC dump looms. It again fails, this is what we want to see. Whales losing money. But as you can see the original whale took huge profits and dumped all the way back to where he started his pump.
This all hinges on people getting scared and selling their BTC when BTC Dumps.
Most coins survived really well last night because the holders did not get FOMO and they actually did the opposite and took profits when whales tried to pump.
Only a few alt coins were affected.
First the market will appear really healthy and stable with pretty much everything gaining well. Then you will start to see some coins jump for no reason (whale signs). Like no updates coming, no news etc. Why would the price go up so suddenly? People get Fomo (fear of missing out) and jump on board.
You will see this on all the popular coins like LTC, ETH (though it can be harder to pump this one) Neo etc. Before the most recent crash you will see it on ALL coins like we did.
Everyone will start to get FOMO and buy in. Because the market is so healthy. As BTC approaches that mark you suspect it will crash on you still start to see media stories about it crashing. You will start to see facebook posts about it crashing to $3000 before going to $7000. Streams and streams of hyped up stories.
Then it crashes. There will always be crashes. Because it causes fear which is what is required for this to work.
First alt coins will dump or start dumping. They will usually dump before BTC. This might start on just one or two obscure coins first. It will hit a lot of peoples buy orders and limit stops, which means the price barely goes down or recovers completely. Then another dump will occur where there maybe less orders in so it goes down. Then a further major dump.
This all happens 30mins - 2 hours before BTC dumps sometimes less. Then BTC goes and further dumps are made on alt coins.
There will be pauses for an hour or so on the way down. This causes people to think it is over and again FOMO kicks in and they buy in again.
A week later or maybe a day or two later after the markets look to be recovering they start all over again which is what we saw last night. This dumping could go on for a few hours or a few days.
If things start to recover and people gain confidence and there is a week break from dumping, the next big dump will usually be a day or half a day before the previous one to throw people off guard again. It will very unlikely be at a similar time/day.
How far will it go
If you look at the LTC graph it is very very obvious. It will dump that far. Look for the whale signs and when they started. It will usually be one big green bar on the 30 min or 1 min graph.
This is where it will dump back to. Set your buy back or buy in point to here. Do not buy after you see whale signs.
Unfortunately we don't know when the next dump will be. But it generally follows this pattern. If you suspect BTC might dump at say $5000 it probably will. Especially if the mainstream media who understand nothing about crypto says it will because this creates so much fear.
It will likely dump just before or when it hits that point. You can generally tell it is going to dump because altcoins are saturated with BTC. Use coinmarketcap to see everything is green.. So it is not likely to moon. In order for BTC to go up whales will first take profits out of alt coins.
On coinmarketcap if you change it to BTC instead of USD you can see how much BTC in altcoins. This is a screen shot of after the crash. If you see red then it is not saturated. If you see green above 10-15% then it is and it might be getting ready for a dump. This screenshois somewhere in the middle or slightly low.
Secondly before BTC can go back up they will milk altcoins at least two to three more times maybe. So right now we were just hit with the second wave. But it wasn't actually that successful in my opinion. Again you saw the whale signs and suspected it was coming. The whale buy signs were mostly dumped which meant another dump in BTC was not so certain. But it happened, and some coins such as neo and LTC got hit pretty hard because people bought into the whale signs instead of selling them.
Other coins didn't get hit so hard. Half of the reason is because everyone was weary after the last dump and not caught off guard.
What can you do to protect against this
Firstly you can use stop loss orders, so if a coin drops by a certain percent you sell out. This is a really dangerous game because sometimes whales try to hit these on purpose, and use them to their advantage when dumping. But it can secure your profits.
Second. If you suspect it is coming and all the signs are pointing in that direction. You can sell when you see whale signs. Others choose just to hold and ignore it. Because in general it will recover. And as long as you initially bought in BEFORE whale signs and not after your initial investment should be safe from whales.
Buying after a massive crash is the prefect time to get out in front of whales.
Alternatively you can convert BTC/Alts to Fiat or USDT and buy back in when it dumps.
My favorite thing to do is nothing. I generally bought in really low before whale signs and I am long term hold. It is stress free. But if you want to take some profits and play the game you can come out in a much better position.
So it really does come back to basics, do not panic buy and sell. Hopefully now you know how to spot whale signs a little better. NEVER buy after you see one of these signs. There is a few exceptions though. Occasionally there can be a good reason for mass buy in.
Say a new product or news or something is happening with an altcoin. This can cause big price raises. Often after news is released there is either a full dump or a partial dump and a new baseline is set and the price doesn't go below that.
You need to work out which is real and which is fake and if the change will set a new baseline.
I hope this helped some of you but I mostly wrote if for my facebook group Cryptocurrency Collective. Anyone is welcome to join as long as you answer the entry questions.