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?
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.