Bitcoin crashes occurs because the prices are too high, and buyers are too scarce to resist the pressure of sell-offs. For example, Bitcoin order books record all intentions between buyer and seller in the morning. Bitcoin large spreads provide precious insights. Large traders hide their intentions because the orders are placed in advance. When Bitcoin crashes, buyers and sellers are working together to achieve liquidity because of the volatility. The big traders are simply fishing for new suckers to get into the action to achieve hard currency.The only way to achieve liquidity is by selling.It cost less than $1000 to mine Bitcoin. Would you pay more?
Bitcoin lacks value related fundamentals. Most trading on bitcoin is based on value shocks. For example, risky assets, like junk bonds have a convenience yield and the risks are paid to the investors. With bitcoin, the convenience yield is based on propaganda noise that drives the prices up versus the real noise of cashing in. For the small traders, bitcoin moving averages are useless because of the volatility. The big money traders look at moving averages by determining how big the crash should be before they can trigger more suckers to get into the action. I really think the real trigger with bitcoin is when it falls 50% to 65% of its value. The risk yields for the big traders are huge and explosive in order for the bitcoin market to go up and convert it to cash. The small trader looks at the moving averages as a herd. The big traders are the market makers. If these big traders allow the value of bitcoin to go down by 70%, they may lose the confidence of the herd.
Bitcoin's real cash probability doesn't depend on an investor's expected return. When Bitcoin crashes it feeds off a positive feedback mechanism. Eventually it deviates and causes tensions between the value investor and the noise investor. The positive bubbles are used to accelerate prices, however they are susceptible to regime changes where the pattern turns negative and dominates the sentiment of the big Bitcoin investors. The arbitrage price in Bitcoin allows the market to crash. Bitcoin futures markets negatively affect the overall sentiment and trend of Bitcoin.
Bitcoin is only based on speculation and virtual reality. Bitcoin bubble crashes create an inaccurate expectation then eventually change into reality due to a lack of liquidity. In fact, there's a significant correlation between Google searches with Bitcoin prices. Since Bitcoin isn't backed by tangible assets, then Bitcoin Google searches become the collective mind and interest of the viewer and of quality content. The viewer has to discern whether the content is legitimate in terms of investing as a collective group to profit from. When Bitcoin nearly hit $20,000 in 2017 there was a cascade of pseudo influencers on YouTube, LinkedIn, and Facebook groups that were directly linked to Bitcoin's escalating price. Google trend searches of Bitcoin are the dominant feature not only propelling the price but estimating when the crashes would happen with the downtrend of Google searches.
As more people lose their investments in Bitcoin, the bi-directional behavioral change becomes an impulse. This means viewers will only focus on information determining price decay. Bitcoin has persistent shocks to liquidity and volatility that affect the absolute price when the value goes up. Bitcoin should achieve identical prices across different exchanges, however that is simply not the case.
Differences in risks of exchange failure also play a role in understanding persistent bitcoin price discounts. A recent publication by the IWFSAS indicated that 18 of 40 early bitcoin exchanges were closed along with customer's balances which were completely erased. Due to bitcoin's proof of ownership being derived from a public address' private key, hacking is a major concern. Hackers that discover these private keys use them to attack the exchange's balances and can then transfer these bitcoin into other accounts controlled by them. This was most obvious with the Mt. Gox exchange, one of the biggest bitcoin markets, which lost about $460 million of its users' bitcoin value to hackers. In 2016, Bitfinex, a Hong-Kong bitcoin exchange index, lost another $70 million of its clients' Bitcoin. They announced they would continue operating, however, they indicated they would reduce all customer account balances by 36%.
The real market for Bitcoin is converting illicitly obtained Bitcoin into fiat currency or to simply launder money that increases selling pressure. Most of the Bitcoin scams have a one-year duration that locks your money. If someone invests $100 in a digital currency and receives $1500 in a few hours on their screen, the scammers have no problem giving you an extra $1000 to bring your friends over. In my opinion, 95% of all digital bitcoin exchanges are scams. The Blockchain Transparency Institute indicated that every major digital currency exchange is falsifying trade volume data. Exchanges are involved in was trades, inflating volume figures, and providing inflated and inaccurate price data for bitcoin. Cryptocurrency exchanges have no regulatory laws for insider trading.
Here's a few examples of individuals who could not retrieve their money:
"OKEX is the BIGGEST SCAMMER. This is not a broker, no regulations, this is crook and thief. I opened my digital wallet, made a deposit and my wallet no longer exists. Impossible to login, disappeared, I try to call to find my digital wallet, and no one is able to help. Who is the OKEX owner? Are you regulated? Do you feel impunity for robbing people? Everything will come back on you ten times stronger, trust me, you are not a broker just a ****** scammer. Give me the answer as to where my wallet is on your website along with my bitcoins. I waited in the online chat room from the 21st position in queue to the 3rd position, and after 3 hours I somehow ended right back in the 21st position. I have reported the matter to law enforcement agencies of online fraudsters. I hope that they are actively pursuing and punishing you."
This is just one poor individual among the millions robbed by these cryptocurrency exchanges. What you see on your exchange dashboard is a visual price. The ones making money on bitcoin are the whales who understand the Google trends and how to convert virtual bitcoins into American dollars. Google seeks out these crypto-influencers because they are the ones that are manipulating Google to establish a larger audience of potential investors in bitcoin and other cryptocurrencies. You can use all the technical analysis you want, but the big whales, scammers, and rogue nations are ahead of the game and tracking your every move.