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TL;DR
Full Story
Bitcoin hit a brand new all time excessive of $69,093.28 (hoooray)!
Then promptly collapsed again right 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.
(Have a look at us, speaking the mid-curve discuss).
Right here’s what which means:
Longs taking earnings = the oldsters that had been betting BTC’s value would go up determined to promote.
Shorts loading up = an entire bunch of oldsters 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 hold the distinction.
“Cool cool cool. However how is it that all of them determined to take action on the identical time?”
Merchants wish to bolster their choices, by searching for repeating chart patterns.
(I.e “BTC has executed X round this value level previously, so there’s Y% likelihood it’ll occur once more.”)
However as soon as BTC broke its all time excessive, we had been in uncharted territory (with no patterns to maintain merchants secure n’ heat) — so, lots of these with lengthy positions would’ve bought off at $69k.
Then, realizing that this might possible be a broadly held follow…
Lots of those self same merchants would’ve arrange computerized brief gross sales to set off on the identical value level — resulting in a double whammy of lengthy/brief gross sales which (virtually instantly) tanked the worth.
As to why we’re not anxious?
In February, Bitcoin noticed probably the most value appreciation in a single month in its complete historical past. That’s a WILDLY violent new file for a ~$1T asset to set.
At these charges, a value correction was nicely over due (and when it rebounds — the remainder of the market will possible comply with).
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