Long-time no post, have been having a break from crypto while waiting to see where price goes while keeping an eye on latest events.
A few things I'm paying attention to right now:
- According to FTX bankruptcy filings, they don't hold any Bitcoin. Likely they never did. Therefore there won't be any future Bitcoin liquidations from this entity.
- Ie based on these proceedings, a sell-off of BTC from this exchange can be ruled out, unlike like 3AC/Luna liquidations that forced prices lower.
- Quite likely another exchange falls as the bank run continues, as many already predict. Probably the exchanges people least expect.
A few points on price right now:
- Most speculators are again now expecting at least $14K, or more likely $12K, even $10K. Nothing has really changed here, only increased bearish conviction.
- To this point; I can fully understand why. There is a massive trading gap between $17.5K and $12K (ie no support), despite accumulation at current prices.
- Ironically if BTC had held $30K until recently prior to dropping to $15K, many would instead consider this a bottom, as would be very similar as 2018 capitulation.
A few other random thoughts:
I think it's too early to tell where price heads next, probably as many wait to see how far the contagion spreads, and whether it leads to further liquidations. Nobody really knows how far it will spread either, without insider knowledge that is. Either below $15.5K we finally reach the most bearish targets, or a move back above $18K could lead lead to a bullish monthly close above $19.5K.
The positives to take away from this recent capitulation is that based on volume as well as time, the recent drop is more than sufficient for a bottom. The only lacking factor is an -83% correction similar to previous cycles towards $12K, as many anticipate, despite this current cycle being very different to others (double top without parabolic move to end bull trend).
As for inflation, recession? Bitcoin has
so far preformed better this year in it's bear market than in 2018. One year after ATH and it's down -77% compared to -83%. Notably in 2015 the bear market took 13.5 months to reach -83%, so clearly there is still time for further downside, but otherwise inflation hasn't caused price to collapse
further than usual - only
quicker than usual.
There are three things which are keeping me optimistic that we're not going to see the price go much lower.
Firstly, following the FTX debacle, there's been a huge removal of coins from exchanges, through fear of whether exchanges hold sufficient reserves. NYKNYC, etc. This increase of scarcity of BTC on exchanges could support (maybe increase?) the price as demand exceeds supply.
In reality, exchanges balances have
steadily decreased since April 2020 after some sideways consolidation last year. More relevantly since breaking $30K it has continued to decline and has so far failed to provide any sort of "liquidity squeeze", so I doubt it'd have much effect in the immediate term. This is more about the longer-term effects when price reverses imo.
It won't have any effect until demand exceeds supply (such as post covid crash), but so far this isn't the case. The continued decreasing exchange supply - that could certainly continue to lower without positive price action - is more likely to have an effect in providing a much slower re-distribution period, for example sometime next year. Ie once price begins to move back to the upside, there would much less supply to satisfy demand until considerably higher levels. Even in 2019 price increased by 4x while liquidity was relatively high and continued climbing. I don't think we've ever really seen what happens when Bitcoin reaches a bottom with such low liquidity in exchanges, as previously it's been when exchanges balances have been much higher and rising. Unless there's a lot more fractional reserves than we're aware of...
Secondly, there's no reason for the FTX contagion to spread beyond shitcoins and into BTC (other than misconceived and ill-educated opinion)
Unless other exchanges fall that actually hold Bitcoin, those that are inter-linked with hedge funds that are getting liquidated. But otherwise I agree.
Thirdly, BTC tends to do what's least expected - so if the masses (with their misconceived and ill-educated opinion, fuelled also by MSM) are expecting contagion to flow into BTC and cause panic sells then.....it probably won't happen.
I think this is more true than ever. Though likely to be more relevant with a rebound back to $20K with most people expecting a rejection between $25K and $30K. Then we could see prices return to $50K to $60K based on a decent liquidity squeeze sometime next year. There has been accumulation for too long now, around a year, what's likely to follow is a years worth of distribution at much higher prices. Just imo.
