I don't really want to get into another Tether discussion but someone who trades will be well aware that volatility is usually much more severe on the way down than on the way up.
Hence the saying "Equities take the escalator up and elevator down".
With Bitcoin we saw larger volatility on the way up, than on the way down, ie it went up in less time than it took to come back down.
This is atypical in the markets and suggests that something is propping up the price of bitcoin that doesn't exist in other markets.
The other place you see this is on the day of a IPO where the banks that lead the IPO defend the share price by strong artificial buying at the IPO price.
Trading volume is actually still pretty low, by BTC standards. This is actually a little worrying, since it indicates that the panic hasn’t even started yet.
One of the required components to keep a bubble market moving higher, is the lack of wide-spread loss trauma by investors. This is the first time there has been mass-market trauma, where millions of people will have taken a bad hit. That trauma will prevent Bitcoin from bouncing back quickly as it has in the past. Coming out of this, Bitcoin will have a reputation that it's a very unsafe investment and that will stick to it for a long time.
I imagine it will kick in when the truth comes out about Tether and USDT becomes worthless. Right now the evidence is overwhelming, but there's still no smoking gun. When Tether/Bitfinex declares bankruptcy, or the CEO is arrested at the airport trying to flee to Vanuatu with a suitcase full of cash; that'll be when the bloodbath starts.
The evidence makes no sense. We're supposed to believe that Bitfinex printed Tethers and used them to buy Bitcoins on their exchange - whose on-exchange USD reserves aren't even backed by USDT and aren't meant to be[1] - and this somehow caused a price bubble that mainly seemed to be driven by GDAX/Coinbase judging from the price differences between the exchanges and trading volumes, even though they don't deal in Tether at all. Not only that, it's just too small - for comparison, the total amount of Tether printed as of the end of 2017 was about $1 billion, roughly the same as Coinbase's revenue from fees in 2017. (Another billion or so has been printed since, but that was all after the Bitcoin price peaked.)
There's some circumstantial evidence that they may or may not have been printing unbacked Tether to keep the price at parity, but that's a far cry from powering the Bitcoin bubble.
[1] They were sort of a Tether exchange in the sense that for a while it was the only way for most people to withdraw USD balances, but they only kept a relatively small amount of USDT on hand to cover withdrawals.
Low volume with this much price movement has to mean lots of uncertainty (or perhaps plenty of certainty in a bimodal distribution of price estimates, with the high peak holding and the low peak already sold out, and most of the trading going on in the fringes); there's obviously trading going on at ever-lower prices, but there's obviously lots of Bitcoin being held by people who see recovery as likely enough that its worth holding and not selling—and yet not enough market confidence of that to lead to buying that would stop the price drop.
Lots of people pointing to fraud here, but I suspect the fact that high proportions of BTC are in the hands of early-adopting true believers (compared with other assets) has played a role in the lack of massive crashes
That's not necessarily true in the case of stock market bubbles.
Take a look at Cisco's chart from the dotcom bubble period. It took the elevator up - moving up 100% in a matter of months (adding ~$275b in market value, more than it has been worth at any point since) - and the elevator down. As was the case with most of the bubble valuation stocks at that time. The dotcom bubble massively exploded higher in the Summer of 1999, there was no escalator there. Typically in the case of bubbles, you get a gradual, aggressive move higher, then blow-off top and crash.
For all the alarm surrounding Tether there's no denying it's the one 'crypto' you'd wish you'd been holding this last month or so, which is kind of baffling.
I'm given to wonder whether, if some agency has indeed been using printed Tether to artificially inflate the price of Bitcoin, then is it not likely that we're currently witnessing their unwinding of that position?
Keep in mind Bitcoin miners (and Ethereum miners et al.) keep producing a not-insignificant number of coins every day, at least a % of which are typically sold to pay taxes, electricity, and other operating costs. A constant stream of new investment is needed to offset that sales pressure.
Etherium is mined by GPUs at the moment. So its Etherium that needs to crash for GPUs to become available on Ebay. Etherium has been crashing too, but it seems to be a little bit more stable than BTC actually.
So keep your eye on Etherium prices instead. Maybe Monero (supposed to be a CPU-coin, but some GPUs mine Monero just fine). Those are better representative of the GPU-mining market.
It's not even taxes. If you get a dollar it means someone else borrowed it and they have to give it back at some point or a powerful entity with and army, police and legal system will go after their assets. Your dollar will always be valuable to someone with debt. BTC are just pretty tokens once the craze is over. There is no reason for anyone to give you anything for it.
Not quite. You don't have to borrow a dollar for any old thing. Yes you need to eat and the shop sells food in dollars, but we need to extrapolate more. The shop wants dollars because they too have to pay their taxes.
You could find a shop that takes bitcoin. You buy all your food there. Life is good, you are sat with your girlfriend eating croissants from this store. There's someone at the door. It's the government. Taxes time.
Your point about the state having a monopoly on violence is critical. They want their taxes, they will send you a letter. Then another letter. Eventually they send a guy with a gun.
I don't necessarily have a problem with the state having that monopoly. I'm not some raving libertarian. But the failure of bitcoin advocates to understand this distinction is wearing.
The fear of missing out (on board) drives the price on the way up. The fear of missing out (get off) drives the price on the way down. Classic trading cycle.
Obviously, it's a great store of value if you bought bitcoin in 2017 or earlier!
Tbh, the entire "store of value" story never quite felt right, the original whitepaper was advertising it as currency, yet, it seems unusable for any kind of financial transaction at the moment. Even short term is a risk, the fees are just as high as the volatility and a bank transfer has simply become cheaper.
Fees have actually come back to earth over the last month (although if there is a panic and people start competing for block space, you can expect them to quickly jump back up). Volatility is one thing, at this point you almost expect a daily 10-20% swing in either direction. The bigger problem has been a relentless downward trend over the past month.
> Fees have actually come back to earth over the last month
Well yes, but who would to want to use Bitcoin as a medium of exchange now? The period of fee inflation will surely have killed that off for all but trivial uses.
Similar rationale with Bitcoin as a store of value. A 7% 30 day vol vs USD is, well, chunky.
As a vehicle for speculation and short term vol trading it's clearly still a thing but that's not quite what it was intended for.
>Well yes, but who would to want to use Bitcoin as a medium of exchange now?
The same people that have always made up the bulk of actual bitcoin payments - people buying things on the dark web from markets that haven't integrated Monero yet.
I could be mistaken here but I don't believe the price of gold (relative to USD) has ever halved. Ever.
Now the gold price has, historically, been more stable than USD so there have been times when USD deflated so fast that the relative value of gold dropped by more than half over periods of a few years. But there were very few of these and this is not what's been happening with Bitcoin.
So, if you were comparing Bitcoin to gold as a store of value, you're not even vaguely close.
> Bitcoin is a store of value. 1 BTC will always be worth 1 BTC.
You really want to look at a store of value in terms of other goods and services, not itself. (Major world currencies tend to be stable in value against common goods baskets in the short-term with slow inflation in the longer term, so comparing—especially over a short term—a more volatile store of value to a major currency can also;make sense.)
ETH is off almost 45% from its peak too. For a few days it was stable and it looked like the BTC drop was just a reshuffling within the crypto world, but it seems like that buffer has been blown through and we're in a full-on correction now.
Not the expected crash, though: it's been going steadily down, which surprises me. I've always though the lack of liquidity would produce a crash-to-zero when the bear market came. But there appear to be people buying BTC even now. ... Who?
> But there appear to be people buying BTC even now. ... Who?
Possibly the same people who are already holding a lot and not selling, which is why the volume is low. If those people don't have a lot of free non-BTC assets you'd see some bargain hunting as other investors try to exit, but limited overall volume no matter how hard the rest of the market is running for the exits and driving the price at which the true believers can buy down.
It is pretty incredible how resilient BTC has been to panic selling, it has definitely been trending downward at a high rate but I would have bet that a panic sell-off would have occurred before it reached these prices. There is still a reasonable inflow of money, from the looks of it -- and this is coming from a serious skeptic.
I suspect that the exchanges are doing their best to keep the prices artificially high by limiting sales and withdrawals under the guise of technical issues and support load.
+1 to all of the above. I am just buying small chunks of it here and there as the price falls with play money. It's not much of an investment grade thing yet imo so that's how I play it.
I am thinking the same, there is enough up and down that arbitrage / day trading bitcoins could make you a lot of money.
I find it interesting that always around the full thousands there are sudden immediate pushbacks, for example when it dipped below 8000 several days ago it was pushed back to 9000. same happened at 10000 back to 12000.
I suspect it might have seen another panic sale, had it not so quickly moved from ~$4k to $20k (two months). Once the mania took hold, and millions of lay person investors piled on (Coinbase now has more accounts than Charles Schwab), there was probably no alternative scenario possible other than to go from extreme bubble straight to implosion.
Transaction processing speed should only limit the speed at which BTC are loved on to or off of a specific exchange, but not the speed at which they trade on the exchange which should not involve the blockchain at all.
There has been some significant dumping, Poloniex had a 233k Volume for about the 5 minutes that they price fell below 7k there (it's trending below again).
It's probably someone trying to push the price up no matter what (or a shitload of orders with magic price points that people setup)
I don't really want to get into another Tether discussion but someone who trades will be well aware that volatility is usually much more severe on the way down than on the way up.
Hence the saying "Equities take the escalator up and elevator down".
With Bitcoin we saw larger volatility on the way up, than on the way down, ie it went up in less time than it took to come back down.
This is atypical in the markets and suggests that something is propping up the price of bitcoin that doesn't exist in other markets.
The other place you see this is on the day of a IPO where the banks that lead the IPO defend the share price by strong artificial buying at the IPO price.