Korea's largest crypto exchange raided over fraud suspicions!

Mt Gox whale moved 16 000 BTC to exchange - ready to sell!

This news crashed the markets this week.

Only it didn't. Because news like that doesn't crash markets.

(I'm saying "crashed" in a hyped, journalist kind of way - it was just a little dip)

News and markets

From coinmarketcap.com

622 716 BTC traded in the last 24 hours and you think that 16 000 BTC sitting on an exchange somewhere is a threat to that market? PUH LEASE! Would you even have noticed if the figure was 638 716 instead. Would you even have known?

Journalists write about whatever they think will make money. They're like politicians, quick to shoot their mouths off, but largely uninformed (Sorry, that was a low blow, I'll take a journalist over a politician any day!). Just because something goes a bit viral doesn't mean that is becomes the gospel.

Similarly Upbit is just one exchange. Sure, it's a big one, but it still only accounts for approximately 5% of all crypto trades. And it's not like that 5% just vanished, people are still using Upbit.

From coinmarketcap.com/exchanges/volume/24-hour/

There you go, still in fourth spot for "markets with fees" (and fifth overall) and it traded over $1 bn in the last 24 hours.

But Bit Brain, news does affect the markets!

Well yes, of course it does. But there is news and there is news. I was asked yesterday about what I thought the effect of Consensus 2018 on the markets this week would be. My answer was that there won't be a big effect. There won't be, its not news. It will be the same as the G20 summit, good news, but not news.

When BitConnect was finally publicly uncovered (to the masses, not to those of us who actually have a few braincells) as a scam, that was news. That's the kind of news that you have to act on immediately, that news affects a market. You can't just ignore it, it has a direct effect on price.

But that news is localised. In the case of BitConnect it was limited to just one coin, and it usually will be. If it is a very big coin, like Bitcoin, then it can affect the entire market, but that is rare (and only Bitcoin and Ethereum really have that sort of power).

Then what does move a market

Investor sentiment, that moves a market.

Fortunately it's not the entire market that is comprised of weak-handed fools who panic-sell at the first indication of bad news. There are hodlers. There are professional investors (have you noticed now many hedge funds, banks etc are moving into crypto these days? It's incredible!). There are traders waiting to buy the dips and instantly provide support to the price.

A market moves down over a long period of time. So when China ban BTC mining AND then ban BTC trading AND Jamie Dimon calls Bitcoin a fraud AND India ban Bitcoin trading AND the SEC prevents Americans from participating in unregistered ICOs AND Korea imposes restrictions on their exchanges AND BitConnect turns out to be a $2 bn scam (who knew? 😂), THEN markets drop. But they don't drop instantly, they follow a nice ballistic trajectory that turns from going up to going down.

Markets rise and fall on investor sentiment in somewhat predictable wave-like patterns. No, NOT Elliott waves!* These wave-like patterns are a graphical reflection of confidence in the market and form the basis of TA. Which means that TA is a form of mass graphical psychology (you didn't think about it that way before, did you?), that is actually exactly what it is.

Because the population group of investors is so vast, news struggles to have an instant effect. It takes time to travel. Different investors react differently to news. Investors have different goals. Investors have different trading and investing strategies. One or two bits of news, however good or bad, will never affect a market to a great degree. But lots of similar news over a sustained period most certainly will. Then the entire market can turn. This is why a sustained FUD campaign can work (see this brilliant post for more details: https://steemit.com/cryptocurrency/@bitbrain/money-understanding-it-and-cryptocurrencies-part-4-weapons-of-the-war-on-crypto).

Want proof?

The market started dropping on May 6. Not when the exchange got raided, not when the whale news was flying (It was out in April already, but hadn't gone viral yet).

From coinmarketcap.com

Had you listened to uncle Bit Brain you would have know that the dip was coming, I posted this on Tuesday: https://steemit.com/cryptocurrency/@bitbrain/ready-for-a-pullback. I had seen it coming a few days before as I noticed the climb flattening out. I should have posted the warning a day or two sooner, but I wasn't sure. Sorry.

Conclusion

Markets don't react much to non-critical news. They "build up" news and react over time in accordance with general investor sentiment. Don't worry about the little reports, don't worry about the short term.

The more you play the long-term game in crypto, the better you will do.

Yours in crypto,
Bit Brain

*Seriously, you Elliott wave guys must f#ck off now, not ONE of you have made a future prediction that holds! Explain the past - sure; predict future price levels and timelines? - not in a month of Sundays...

DISCLAIMER:
I am neither a financial advisor nor a professional trader/investor. This is not financial advice, investment advice or trading advice. Unless otherwise stated, all my posts are my opinion and nothing more. Crypto is highly volatile and you can easily lose everything in crypto. You invest at your own risk! Information I post may be erroneous or construed as being misleading. I will not be held responsible for anything which is incorrect, missing, out-of-date or fabricated. Any information you use is done so at your own risk. Always Do Your Own Research (DYOR) and realise that you and you alone are responsible for your crypto portfolio and whatever happens to it.