Hi all,
It's far past time for another loosely formatted, highly opinionated Gordon post extraordinaire.
Anyone who trades cryptocurrency on a daily basis will be aware that Oct. 1, 2020 into the early hours of Oct. 2 was a turbulent chunk of time in the market. There are a few important things to learn from the past 24 hours; some of it is good news, some bad, and some of it depends on what you choose to care about.
The market dropped and started easing it's way back up for a bit.
And then, the POTUS and 1st Lady tested positive for COVID-19.
The market dropped and is now starting to ease it's way back up for a bit.
As a day trader, these things matter. Actually, for that matter, as a citizen of planet earth these things matter. For some, awareness doesn't mean you don't receive the impact regardless.
Bitmex; you can't do that. So, don't. NEXT! But really, the U.S. is pushing too hard with too heavy a hand when it comes to regulation, and it hurts the crypto sector tremendously; I'll tell you why in a moment.
The fragility of the global politics has been showing it's ugly head in the year that is 2020, a year that spits in the face of what could have been a celebration of perfect numerical symmetry and the slogan "hindsight is". But, Nooooo! It had to get all Gates and Fauci on us. Oooo the masks... ooooo the hand-washing... oooooo burn the world down.... oooooooooooo... 2020, you mock us so.
But nevertheless, we had a Bitcoin halving, and without any trip-wires to halt trading (other than well-designed lack of organization from Coinbase and Robinhood hehehe), Bitcoin bounced from a $5K floor to $12K and is stable above $10K for more than 2 months. That is pretty remarkable.
So, I wanna talk about how Bitmex and COVID-icusPotusMaximus matters to crypto.
Bitmex has some rocky signs of being the bad stuff that gives crypto a bad name. It is very possible that some of the market activity was not just classic FUD and FOMO from part truth part shill news. It is very possible that it was largely affected by the actual activity on their platform in response to the news. Will there be any examination of the actual trading that took place and whether it relates to indiscretions of insiders moving shares around? Futures, contracts of all kinds, margins and leverage are all a part of the Crypto economy now, and despite the stupid that goes along with these in the regular financial sector, people flock to take advantage of the first bad idea that comes into finance.
The fact that news can destabilize a $100B+ volume daily business as quickly and to such a sensitive degree is disturbing. People don't realize that a 3-5% sudden drop in Bitcoin, which in turn usually means more on Eth, and similar degree to the other long-term top coins like Neo, Ont, Ltc, Xrp etc., requires hundreds of millions of dollars worth of market selling. The bounce back upwards requires double of whatever sold off. People say it "only" dropped 4% initially. And yes, 4% is a silly little number in crypto considering UNI did +1000% last week when it hit Binance. But, everything that hits a big volume exchange goes through the same p&d before it settles into its actual value over the months that follow. The big staples have global finance, whales, banks, institutions and real-world financials tied to every shift that is more than 1%. Leveraged positions get trashed with very small percentage changes. Leveraged coins drop 12% when BTC drops only 4%. It takes 24% for that to re-balance at the correct value, because this is actually all measured in percentages.
The bottom line, in my opinion, is that it serves the crypto world well to understand small percentage changes in the biggest, most relevant coins with the longest track record matter a great deal, and small moves take big money. They are significant. In the end, though, I absolutely concur that the ability to accept the buy-in and steady rise and recoup is yet again a very positive sign of Bitcoin's strength. It is far from stable, and there is always a benefit to the top players to sell off hard at the drop of a hat, in order to buy back in at the right time. But, the fact that we are sitting at $10,500 after being at $10,500 two days ago is pretty remarkable. The fact it was breaking $10,800 before the news nonsense matters less than Bitcoin's ability to recover the current value people are placing on it.
Now, adding to the fact that 1 am news struck with Potus and Flotus testing positive for COVID-19, the news hit the market all over again and the sell-off was nearly identical. Something ironic and potentially moronic; if a person zooms out to the 15 min, 30 min, and 2 hours candles, they will see recent weeks as an almost perfect pattern of averages, as if the news were just a convenience to help Bitcoin do exactly what the candle-length visuals say makes sense. It is kinda crazy. But, there is no question that the news presents the opportunity to cause exactly the right panic at the right times.
My bottom line to all of this, is that the news matters, shill or not. Bitcoin now more than ever, moves with the mainstream world, and that has been the case more in 2020 than any other time. It is bad news, in the sense that we really want this crypto stuff to be about crypto. The more it falls in line with the world, the more it can be manipulated to much the same degree. The idealism in crypto has been diminishing, but the true believers still abound.
Last thing; DeFi. This isn't the place where I'm gonna start saying all of the things about defi. But, in the midst of everything else: it is a fad. That doesn't guarantee that it goes away any time soon. But, it has been lingering in the crypto world for over 2 years... much longer actually, but to the degree that every major platform has been pushing elements of defi, from staking to savings to lending for leverage and many other angles, it is a catch-phrase and it is, in many ways, a deterrent from the better side of natural ebb and flow. The crypto world is going to suffer from lack of knowledge if it doesn't center more around regular market trading. There is a lingering idea that traders are bad and that everyone needs to just buy and hodl.
Consider this (and yeah, I will rant more in a completely separate post), that an old adage to hodl, is that if you don't own your own keys and coins, you are opening yourself up to getting tagged and hacked. Not your keys, not your coins, right? But, staking, locking up coins etc. do not place you fully in charge, and anywhere that you can earn by adding to a platform's liquidity offers the potential risk that comes along with it. Short term gains from entities that are a massive mathematical experiment is not a guarantee that 2 years from now, 5 years, 10 years, that anything they promise will actually come to pass. Just look at 2020! China could crush the crypto world if they dominate global politics. A massive Covid- the sequel, real or not, could devastate the economy and cause numerous platforms to simply abandon us. It could happen.
But, rest assured, we learned a lot from this year's resilience, and it makes me think that something more than utter chaos is required to throw Bitcoin off it's center. The comeback proves its strength. Each time there is a knee jerk, there is a show of value, and that is good. DeFi will neutralize into a wider sea of buzz words that come from the traditional financial sector. Bad players will give it a bad name. Good players will be an education in what has been around for decades, and there is a secret meeting of the minds between those evil centralized banks and people sticking it to the man in crypto, by doing the same exact things as the evil they are running from. In the end, October has started as a sign, a warning, and an encouragement that the crypto world is everything that I expect of it, and perhaps a little bit more.
Stay in there, everyone! Don't get tricked by massive leverage and binary contract trickery. Learn the numbers, learn the indicators, and learn to show your support for the more credible projects by cautiously saving, and adding to your stack when the dips happen. That is the best way to do this thing, unless you get more proactive and do even more serious trading. It takes knowledge, diligence and effort. Hoping for the best for everyone in crypto land!
And, for now... Crypto Gordon Freeman, the Free Man, fighting for injustice in the land of crypto-magico... out.