What happened????
Look at this theory about todays chaos in crypto markets:
My theory on the real cause of today's chaos (expiring futures contracts allowing for risk-free market manipulation) (self.CryptoCurrency)
submitted 59 minutes ago by Gigged
TL;DR - The cause of today's chaos is likely large hedge funds using expiring BTC futures contracts as safety nets to exploit the only sure-thing in this market: a large amount of new/overextended investors who are easily moved to panic sell during a flash-crash.
On December 10, BTC futures trading went live. The first set of those contracts is set to expire tomorrow, January 17.
For those who don't know, futures contracts are agreements to buy/sell an asset (like BTC) at a specified future date and price. As the price of BTC was ~$15,000 on Dec. 10 , the first BTC futures contracts, which expire tomorrow, were fixed at about that same price. In a simplified form, this means that tomorrow:
the "short" side of those contracts must give the "long" side a BTC (which, if they don't already have, could simply be bought at tomorrow's market price); and
the "long" side of those contracts must pay the "short" side $15,000 in return.
Now imagine you are a large hedge fund evaluating these contracts, and the crypto market as a whole, on Dec. 10. Obviously, making a large bet on either the "long" or "short" side is extremely risky, since the price of BTC when the contracts expire (January 17) could very easily be $50,000 or $500. This makes large bets on either side a bad option for a large institutional investor like yourself.
However, you also know that crypto is still an emerging market with a large amount of new investors and "dumb money." And because you are a large hedge fund, futures contracts opens the door to a third option: use large bets on both sides to manufacture market chaos and make money on the ripple effects with little to no risk. Here is how:
Bet big on the "short" side of the futures contracts on Dec. 10. Let's say you do this for 10,000 BTCs. This means that on January 17 you will owe 10,000 BTCs to the "long" side of those contracts, receiving $15k per ($150,000,000) in return.
Buy an equally large amount of BTC on Dec. 10 at the market price ($15k/BTC). This cancels out your risk/reward for the futures contracts, making you essentially immune to changes in BTC's price while you hold both the contracts and BTCs. This also allows you to accumulate and hold an extremely large portion of the BTC market while taking little if any risk .
Shortly before your futures contracts expire, dump all of your 10,000 BTC on the market at once. Like clockwork, this will trigger stop-losses and panic sells from the consumer BTC market, virtually guaranteeing that the BTC price will continue to dip well below whatever price you just sold those 10,000 BTC for.
Ride that dip you just created to buy back the 10,000 BTC for much less than the price you just sold them for. This is particularly easy, since the funds you need are already liquid and ready to get back in the market.
Use the re-purchased 10,000 BTC for the expiring futures contracts, which get swapped for your initial investment ($15k/BTC). The difference in the price that you sold the 10,000 BTCs to start the dip from the price that you bought the BTCs back during the dip becomes your net profit.
For funds with access to enough capital to move the crypto market, this play should be easy money. It would also explain the series of huge dips (seemingly out of nowhere) that we are dealing with today.
If I'm right about the cause (and I'm fairly confident that I am), the good news is that today's dips are likely temporary and not signs of a more serious issue with cryptocurrencies as a whole. The bad news is that I don't know how this can be stopped as long as the prospect of capitalizing off of market fear remains a huge carrot for the sharks in this market.
source:
It's a jungle out there
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ouzo and out
@onceuponatime
I just almost hit the button to sell everything. At the same time I saw your post and it somehow stopped me doing what I wanted to do. This is panic and we should make these kind of decisions with cool head. I’m gona take a cold shower now.
Thank you so much for your post!
Resteemed!
It's funny really. I nearly sold several positions as well with the idea that I would buy them back later. Then I looked up what time the contracts expired and saw I had another hour at most. So I just waited. I was both pleasantly surprised and shocked when, practically on the dot, everything turned around and started climbing again.
That's great to hear that we can help each other. I post daily updates on the market and different coins. Hope this post will give you some insight:
IMPORTANT Coin Updates (BTC, ADA, BTS, EMC2, ETC, GNT, SBD, STEEM, XVG)
https://steemit.com/bitcoin/@benkalashnikov/important-coin-updates-btc-ada-bts-emc2-etc-gnt-sbd-steem-xvg
chill ...you will not regret for this decision in future..
There is no word to describe how I feel now. This moment could have just changed me. I have always panicked just like most of the people do. Of course, it’s natural, but I’m cool now. I have a plan and I stick to it.
Thank you steemit😂
Good for you. Next time instead of panicking just add to your position. That’s the reaction of bold guys.
Yeah..till u run out of btc lolsss
A though crossed my mind this morning, that this drop may be a good thing. With the low price, I'v made a few investments (IOTA, LITECOIN and VERGE) and I expect them to grow.
Top Cryptocurrencies Pending Price Target and their due dates//
https://steemit.com/cryptocurrencies/@salahuddin2004/top-cryptocurrencies-pending-price-target-and-their-due-dates
If you can't even take a 50% dip, then you are wrong in crypto speculation.
It used to be 80% or even 90% for Bitcoin.
Panic selling or buying is always a bad decision, the more aware you are, the better. These kind of posts are key to educate new investors, thanks =)
I agree with @onceuponatime and the only thing I would like to add to the rest of us the regular people is that in times like this the bitshares DEX can save a lot of the pain.
Don't be all in in crypto. I know it is difficult not to be all in and I also can't resist be all in crypto when we have a bull market, but keeping some bitusd, bitgold,biteur,bitcny for times like this is something we all need to consider more in the future
The history of cryptocurrencies have taught me so far that when we have so big % changes either up or down, usually a centralized exchange all of the sudden is "hacked" and people lose their money. Keep it safe and trade in bitshares DEX...
If you want to trade with leverage, just buy some bts and short bitassets into existence within the DEX. Not the best thing to do in a bear crypto market like now but definitely something to consider when the bulls are back. If you do decide to go down that road make sure you understand the risks and you are capable to maintain collaterilized your position.
When you are in a bear market and you don't know which crypto to buy just buy some bitshares and steem of course and HODL..Don't buy shitcoins but just buy something that has some utility.
A fellow bitshares enthusiast!!!! Hail there, well met!
Just another sale :D
I think since 2015 which I started watching crypto and bitcoin mid January was always the lowest BTC would get and any other crypto for that matter.
Lunar Year and New Years eve beeing so close really affect the markets in my opinion.
In a side note Steemit made it at the top 500 sites at USA so I don't mind the sales these days. It makes it easier to chose an investment. Have a nice day.
I had a habit and I would panic before and sell, now I just sit back and relax , I got time , and the market will eventually rise . They want us to sell under pressure . Not this time tho :D
Yup. Thats their plan. It won't work!
Certainly seems like as good an explanation as any; the fundamentals of cryptos and blockchain technology didn't suddenly change overnight, so some other influence would have to be at play. I noticed BTC bounced hard when it briefly hit $9500, so maybe that was some limit among institutional investors?
Seems to me like this would be a singularly dumb time to bail ib panic selling, and possibly a good time to pick up things at a "sale price" if you happen to have any cash sitting on the sidelines.
The only question that remains somewhat open in my mind is how long it will be before the (dumb?) money stops treating "all cryptos" like BTC. Surely we must soon reach a point where BTC starts doing it's own thing without every alt coin following like "sheep."
If you have bitshares you always have the possibility of "cash sitting on the sidelines" because of the ability to use bts as collateral to leverage up.
A friend of mine (the one who introduced me to steemit) told me all about this last night and I got alarmed. I mean...I was thinking to sell ALL the $150 I've earned so far and go have the biggest feast in a miserable tavern's history (and make the owner's day since no one ever steps foot there). Also, I was about to cry for my Wacky Facts series, as it would be cut after "airing" for only 3 episodes. Then, I read this article by Lord Vader accompanied with a few shots of good red Nemean wine and I saw the world with happy, vivid and bright colours again. (It may be the wine though)
I also prefer wining and dining to whining and dining :-)
Therefore, it means we are ahead for more turbulence. Or, effects will be nullified by the competing hedge funds. In the future, with the additions of more futures such as "basket of top 20 altcoins", we will see more such crash and bumps, or will we? How can then cryptocurrency be stable market which already swings like pendulum.
It seems very logical and explain whole the chaos in a very great way.
The company behind the controversial BitConnect has announced that it will close the lending and exchange platform Where they received a message from two organizations in Texas and North Carolina. The content of the letter was that BitConnect was involved in the sale of unregistered securities linked to the symbolic sale.
Where did you hear that?
Directly on the BCC website, and confirmed here:
https://news.bitcoin.com/bitconnect-shuts-exchange-citing-string-excuses/
and also here:
https://medium.com/@coindesk/bitconnect-shutters-crypto-exchange-site-after-regulator-warnings-be7e1566d1c0
My experience because I'm working on a company that is a provider of data exchanges is the panic always brings profits to the big fans .. my personal opinion is not to trade with derivatives-futures at their expiration..
unless you have someone who has give you information or you like the panic..😀😀😀
People pay good money to go on thrill rides at the amusement parks.
with the example you gave me, you are absolutely right..some people do not care about the money what they will lose.. they just want to have fun..but how many are these people?
I'm having fun!
Haha, I just made a replying post saying this same thing. I'm not an expert so it's good to see somebody more established saying this, I see a bunch of stuff about China and Korea and how it's all just panic and... No, that can't be just it. This kind of dip would only come from something said in the USA or EU, I think that's precisely why China chose yesterday as the time to let that information go live.
EDIT: Actually, I think you are the source of the post that got us talking. (friends and I) I might be replying to you agreeing with your idea via second, third, maybe fourth hand sources. Small internet, I suppose.
I used to live in a room full of mirrors. All I could see was me.......
Got an appreciative chuckle out of me, a rather clever response.
It will eventually stop as people wise up and learn how to protect their positions better during times like this...
If people were getting margin called if this problem was spiraling down for more than a month...
But we're talking a full week at best... Surely people should be able to afford to protect their positions and buy opportunities when things change direction for a week? We haven't seen that much resistance. The line seems to be quite cleanly going down.
If you go "all in" on crypto, and leave yourself nothing in fiat to take advantage of buy opportunities, then we allow these sharks to control the market the way they want. That's not good.
You are right. Always have some dry powder on hand!
for me I am buying like crazy... I live for this kind of excitement :)
When (if) I grow up, I either want to be a professional roller coaster rider, or a professional crypto currency trader.
I mean for me really its nice to feel things again ..
it sure feels like your on a crazy roller coaster..
that is bitcoin now :D
Lol, I've stopped looking at my blockfolio, I don't wanna cry 😢
Same here. I don’t even have the guts to open my app and check. I’m just going to pretend it’s not happening until prices go up again ;-)
Sounds like a plot for a BLACK MIRROR episode.
dear @onceuponatime you are really good with numbers.
i wish i was as good as you are with them, but unfortunately i'm not.
great post anyway!
I just went shopping today and picked up a small amount here and there of some of my faves as EVERYTHING is on sale at the moment! Peaks and valleys people just like with everything else. New highs will be here soon enough.........
Hi @onceuponatime, This is without a doubt so far the best explanation on this topic. You nailed it man. Thank You! For many, this is a chaos situation whereas those who understand the crypto dynamics are happy because they are making buys since the prices are very low.
Coming up next:
Steem On!
I think that information is not correct because cryptocurrencies have a lot of future. Only that there are days that are low and high. The cryptocurrencies have seasonal seasons that better example than the bitcoin is the best example since we see days and months that goes down too much but then it is established and goes up. This happens when demand decreases and people feel scared and decide to invest in another cryptocurrency. You will see that the bitcoin for May of this year will be at 22,000 USD.
Greetings from Venezuela I hope we can continue reading
Read the article again. You didn't understand it.
The value of the cryptocurrencies is always fluctuating, the trend will grow in time. We had always seen periods of regression, what I can say is that knowing that information shared in this good post would be great around the 8th of December :)
For the real reason, we’ll need to analyze some goat entrails and/or consult the Oracle at Delphi.
Tea leaves work too!
Hey you bring up some good points. However i also think the manipulation also takes place in Korean government. Its a small country with not many products so for them cryptocurrency is good way of making money. They want for an average person to sell there currency by making a panic so at the end they would take the profits china did the same and i will predict that this trend will continue so its very impotent to not sell even if it goes down low, i think it will bounce back up eventually heighter then it was originally.
Maybe I am just greedy or something but I dont feel like selling unless I get like 1million dollars.
If you paid 1 million for your portfolio, and you can still get 1 million for it today, then probably not greedy to sell today.
this is madness man!! i thought that i'm the only one!!! pfff
Bitcoin futures kinda just complicates the market in ways we can't see at this point in time. It transforms the whole idea of the blockchain into a sort of gamble;
There is a bloodbath out there, I think its time to buy more and hold to next year.
There is a feeling of being a kid in a candy store with limited funds, and so many bargains.
Annual Chinese New year sell off. Chinese Lunar New Year is 16th February and the Chinese visit families and spend cash on gifts and travel and will by tradition be generous so you see the heavy conversion of retail style investments into fiat currency to buy presents and celebrate with family. January is often a quiet month for business in Asia, and this is every year and Asia is where much of the crypto trading volume is. Prices for crypto should be low until the week of 16th Feb and a good time to consider taking advantage of lower prices and the rise in values should happen after mid to late February. :) Hold/ buy
HOLDING!!!!
Buy the dip! Bitcoin is not a bitconnect. This is a huge opportunity to get on the 🚂.
This is panic selling and we should take advantage of it.
Great post!
Resteemed!
Setting up futures on crypto-currency is definitely very risky in large doses, but I know you are right or in general, this crash is temporary. That last dip straight after the rise wasn't completely seen coming and the coins are expected to rise again. This is just a further set back and we will have to wait to sell.
LOL that picture about sums it up very well
You would think these greedy bastards would get tired of destroying and breaking the world. At some point you just have so much blood money why bother getting more.
I know how the universe ends and it will be at the hands of a hedge fund/investment banker. We don’t have worry about all the others stuff…
As far as theories go sounds better than anything else I’ve ready today. Will be interesting seeing where an equilibrium forms after they exploit this out a while to max profits.
But your parents'/grandparents' pensions are in those hedge funds LOL
Not so much after they milk those front loaded and back end fees out of it. That's just double dipping the bastards! hehe.
You are right this is temporary... i think its best time to buy....so that why i bought some steem & BTS yesterday ....thinking of buying some more today also.
I quite agree with you as to the reason for today's occurrence. But I'm pretty sure the market is gonna bounce back in a bigger way. Resteemed.
Thanks for this post. But people still panic and easily sell during a flash-crash. It's January 17 by the way.
I like the colorful art/drawing.
The selling probably began in Asia when it was still the 16th in America but already the 17th there.
We just have to watch what will happen
Thanks for the clear explanation. I Finally get why those futures were a bad thing. Bitcoin is big business, and if you can manipulate the market like that and make huge profits, that’s awesome. I’m not saying that I agree with it and that I think it’s a good thing, but I admire the fact that those people are playing it very smart...
Thanks for the post. Today I sold soen which were not in loss and bought which corrected heavily like 4 to 5 times frm its peak. Hoping that your words come true and market starts cheering up again. Cheers. Resteemed.
That's great news for us. There is finally a good moment to buy again.
BTC soared to 20,000$ too fast, I'm glad that it corrected.
Now after a while it should keep its healthy growth (I hope).
I have to admit that when Litecoin touched $167 today, I thought we were going. Now hate having missed the bounce.
Everyone should just keep calm. We are gonna take over the world again. That's taking a risk in business.
I hope some people's blood pressure does not rise
@onceuponatime sir...
Digital money can make us rich to deal with ourselves. I genuinely trust that. Be that as it may, what I additionally accept is that it will influence us to sufficiently fit to serve the penniless also.
It is absolutely difficult for all to give. Every one is battling in their own specific manners. In any case, that is the magnificence of life is it not? One who has seen the intense time will identify towards the one enduring. Such a one when independent can promptly consider helping other people. When I put in endeavors to gain, I should put in little endeavors along to share.
One might be poor out of absence of education, another might be expected life's weight of overwhelming obligations, another might be out of sheer apathy and some might be not able meet the sudden needs of life. In any case, the truth of the matter is same. They all need assistance. From numerous points of view it can be tended to...
Are you a Preacher by any chance?
Sale is back again.
Thanks for sharing this! Reading stuff like this makes me think twice about selling. Going to HODL for sure!
Panic selling or buying is always a bad decision. These kind of posts are key to educate new investors, thanks =)
The most famous and successful investor Warren Buffet predicted about BTC back in 2014. It survived. The prediction proved wrong. Fast forward, last year, China banned BTC and put a temporary dent on its growth. People panicked. But what happened? BTC bounced back with fullest power and went from $3000 to $6000 and never looked back. Now there were disinfo and fuss about Korean ban. It created confusion whereas the real issue was this BTC Futures contracts. So centralized money advocates keep attacking crypto market but it gives more power and strength to us and we bounce back. Who is willing to see this soon?
Great post @onceuponatime.
I'm not selling :-)
the theory described on reddit makes sense just if the volume of BTC one investor is able to move is big enough to have effect on the price in the markets which is hard to happen for BTC market.
my 2 cents of old stakeholder ;)
(btw, I bought bts today ;) )
Institutional investors buying derivatives and dumping can certainly affect the market. As an example, the gold and silver derivatives markets completely dominate the prices in the physical markets.
I don't know the volumes for the btc futures. It seems hard to believe for me that investors in btc future (even istitutional investors, if are there) are able to influence the price of btc - btc has a daily volume of 10.5billions (today), you have to sell big numbers to move the price.
but, who knows?, theorically it is possible.
The best news of the Day ;-)
Let me start my day with this positive thought that "this shall too pass" and everything will be just fine soon.
Thanks for writing a worth reading article.
Stay blessed, Steem On!
@onceuponatime,
Once my friend said, when BTC at the Futures, the current whales in the market are just minnows when comparing to whales in the futures. And he noted they can be killer whales which do whatever to take the profit out! This article reminds me what he said!
HODL is the only option and weak hands will let them to take our hard earnings away! Thank you very much for sharing this useful update with us!
Cheers~
With friends like yours, who needs to talk to astrologers LOL
@onceuponatime,
Actually I am thinking he is kind of astrologer. When BTC at $20,000 he said it will drop to $11,500 again, yeah it dropped more and went to $9,100 level!
Actually I don't know how he is doing that, but he is one of the best Chart and Fundamental analysis for me! few days back he told us, STEEM, BTS, EOS and ADA (he doubt ADA anyway). This is the future and we must focus on them, 2019 will be a big year then!
So, I started my process to collect specially STEEM and BTS!
Cheers~