The Truth About Crypto Manipulation
Don’t blame real trends on the bad guys
Everywhere I look in the cryptocurrency community I see claims of manipulation. “If only the big banks stopped selling, then crypto would moon,” is usually how the conversation goes.
Not only are these statements naive, they are dangerous for anyone who wants to be a serious investor. What you’re really saying, is that you bought an asset at a dubious price. Your timing was off and now you’re not patient enough to wait for the trend to play out so you’ll blame anything, or anyone: usually Wall Street or some hidden cabal.
Look at the Bitcoin chart above and you’ll see that what has accompanied the decline from the speculative rally in late-2017 is a serious decline in volume. If you add the fact that futures markets are available then the bears are simply defeating the bulls. Until there is volume from a speculative rally then Bitcoin goes nowhere near the all-time highs.
Now of course, big traders and banks will no doubt be involved and shorting rallies, maybe causing some fear in certain spots but they would never have the ability to hold back a speculative rally if there was serious game-changing technology, or mass adoption.
Spoiler alert: The Bitcoin story has stagnated, big buyers are holding, retail can’t power this higher and regulatory threats are causing many to doubt the future of cryptocurrency.
The exact same story was told by gold bugs who also failed to see their dreams of anti-establishment riches unfold on their desired timeline.
Once again we see that simple volume is at play. A build in buyers led to a rally in gold towards the $1350 resistance level last year on fears of a North Korean war or an escalation of tensions in the Middle East. What happened next? North Korea made peace with President Trump and the Middle East did not escalate so buyers retreated. In both cases we see that Bitcoin and gold, both of which are seen as an antithesis to the current financial system and its extreme leverage, have declined because the current system still works.
You may think you know more than Wall Street or the pension funds who invest in stocks at these levels but they have no other choice. Neither gold nor Bitcoin pays a guaranteed return like those gained through dividends or bond coupons and while the economy is growing, there is no need for them to seek safe havens or value stores. Any pension fund manager that lost on gold or Bitcoin while stocks were up 100% would no longer have a career in the industry.
Big investors can manipulate a price in the short-term but they cannot change a trend in motion if big money was piling into a market. In that event, they’d likely be on the long side. The market capitalization of the crypto market has been in steady decline this year and there are no new buyers of note. Until the doors open to retail or institutional investors then don’t expect that to change. Stop blaming manipulation and start trading better.