Bitcoin trade volume price analysis — Smells like pump and dump
This week was all about bitcoin , so being Fintech guys that all we did this week; Looked at Crypto-currency and bitcoin.
Given our experience at JP Morgan in equity trading and risk analysis taught to us by Jamie , we looked at some trading stats and found a very interesting trend.
This is a 30 day sum of bitcoin volumes across all exchanges and derived price. There is no one exchange that set the price for bitcoin as there is no market maker (aka JP Morgan, Bank of China etc) for traditional currency.
We noticed some interesting and unusual spikes in trading volumes. We noticed that whenever there was a spike in volume , it was usually for a large sell order. Then relative calm as retail investors kept buying , then spikes and boom price goes down… retail investor buys again.
If institutional investors are coming in the spikes would be on the buy side not sell side. Of course smart institutional traders buy in small chunks and over a long period, so they don’t disturb the market.
Give the fact that large amounts of bitcoin are held by a select few miners and early investors. Such large volume sales are an indication that the original backers are starting to offload them.
Now the only reason someone who backed Bitcoin, when it was 0 and now selling out is they don’t believe Bitcoin has more legs to go.
Cashing out at the top after a huge PR blitz and selling it to retail customers is a classic pump and dump. We tried to find the source of the sales but given the fact that bitcoin are meant to be untraceable , we cannot find it.
Also given the fact Bitcoin is not regulated by SEC , pump and dump is technically not illegal for bitcoin unlike what you do with penny stocks. Remember Wolf of wall street ?
We at YBR capital do not own any bitcoin for disclaimer purposes and will watch this wild ride and see if we can find more on this.
Our call total pump and dump … goes back to below $ 1000.
To be continued…..