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..aaaand, we’re back at it once more — a rebellious bitcoin price. Sunday evening’s bitcoin flash-crash produced a red candle as colossal as Jupiter; and more intriguingly, it continued to fall on Monday morning, dipping below $111,000.
Now, here in the realm of bitcoin price therapy, we assert that nobody understands why prices fluctuate. But at times, we actually do… albeit not as comprehensively as we wish. Today, I’ll explore two topics: the shenanigans of the previous 24 hours and Fed Chairman Jerome Powell’s comments from late last week.
A Turbulent Bitcoin Price
Late Sunday (European time) was quite vexing:
It’s challenging to declare “nobody knows” when a chart resembles that; somebody is aware of what caused the bitcoin price to plummet approximately 3,000 in mere minutes. If it’s not a particular macro event, akin to last week, the sole factor plowing through order books like this are a) massive orders, and — equivalently — b) mass liquidations.
Yesterday, there were hints of both:
or…
This is an immature market, and it’s astonishing how small we are and how illiquid the bitcoin market remains: still susceptible to being influenced by individual market participants. (As is always the case in Bitcoinland, there’s always some fool ready to turn a verifiably bad situation into a good one.)
The 2.5% immediate drop in bitcoin price last night might be an isolated incident due to a whale selling or some liquidations, but the gradual, diagonal descent overnight and Monday morning (with bitcoin price collapsing below $111,000) is far more concerning. Dismiss the big, loud whale… what the heck is occurring? Why are we slowly failing when we should be prospering, son!
All the macro indicators globally are pointing in the correct direction: Why is the bitcoin price trading down, in this zone, when any rational assessment would place it double or triple from this point…? (And no, we didn’t drop below $111,000 as or because or in relation in any way to Metaplanet announcing purchases).
Price behaves how it sees fit; shitcoins act freely.
Bitcoin price therapy undoubtedly required: Bitcoin price behaves however it wants, disregarding reason or logical evaluation. Not a concern in the world for the most optimistic scenarios. Maximum agony, I’ve heard it mentioned. Not even Saylor’s million-dollar-cost averaging made a significant impact:
One of these mystical tea leaves reading methods (128-day moving average), informs us our Bitcoin Magazine Pro team today, stands at $108,500… so we’ll likely reach there. Saylor et al have already partaken of their kidneys and chairs, so I ponder what remains.
More intriguing/daunting is that it continues to decline afterward, reaching new lows. Our most scoop-like explanation is that all of these shitcoins — managed by Mr. Bailey, the owner of BTC Inc, who recently torched about $41 million — gobbling up these coins during the spring couldn’t retain them and are now regurgitating them; some, in liquidation-laden red candles, and others in slow, grinding, time-weighted pricing.
A certain Cypherpunk OG appears conscious of the structure:
Bitcoin Price and Powell’s Commentary
Occasionally, we actually (sort of) do grasp what transpired in markets — like last week, Aug 22, at 10 am Eastern: Posted on the Fed’s website was the statement/upgrade to the Fed’s monetary policy framework. It was broadly interpreted as a potential easing of monetary policy anticipated. How do we know this? Because every (hard) asset surged immediately, and the dollar index dipped:
- 9:59:49…bitcoin price = $112,393, according to Bitcoin Magazine Pro’s chart.
- 10:00:49, one minute later, it’s 113459…
- a few moments after, we reached 115,000, with the bitcoin price climbing 2.3% on the news.
This is the type of occurrence that impacts markets, and the instant, significant changes give us confidence that THIS is the trigger.
(for reference: 9.59, DXY = 98.7; two minutes later, 98.15; another minute, 97.8. That’s 1%, in a blink… That’s a significant move for the DXY!)
Now we’ve identified the origin — Powell’s speech and/or the release of the statement. Which aspect of his statement caused such a stir in markets?
What transpires during releases like this — or inflation figures or unemployment by BLS — is that straightforward trading algorithms scan the websites for immediate updates and make instantaneous evaluations, often with delayed trading consequences following. The move itself frequently reverses ten, twenty, thirty minutes later when human and wise assessments have been engaged. It was all a nothingburger, after all. That wasn’t the scenario this time, as the bitcoin price traded highly over the weekend (until someone spoiled the fun on Sunday…).
Powell’s comments last week indicated that
- inflation is somewhat elevated, yet manageable and decreasing
- GDP growth had significantly slowed
- unemployment was stable and balanced (yet “a curious kind of balance” where supply and demand fall simultaneously) → overall risks up.
- …and they’ll discard this entire flawed notion of an average inflation target (over a time frame nobody ever defined).
“In the near term, risks to inflation are inclined to the upside, and risks to employment to the downside — a challenging situation”
However, Powell concluded that those risks “might justify altering our policy position.”
In the minutes and hours following the speech and the statement’s release, bitcoin price peaked at $117,000, before retracting to $116,000; that’s market participants examining and interpreting, organically, what this new landscape signifies.
All in all quite disheartening. We need Bitcoiners thriving and flourishing, not impoverished and upset.
Bitcoin price therapy concluded. See you all in Hong Kong for Bitcoin Asia.
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