Why did Bitcoin crash today?
Bitcoin crashed today because the smart money took what the dumb money had on offer.
If you're reading today's market analysis blog on LeoFinance, then you were no doubt somehow caught up in today's Bitcoin crash.
While CNBC and the mainstream news outlets will tell you that Bitcoin crashed because of China banning Bitcoin, I'm going to tell you otherwise.
China sure makes a pretty headline, but that's not why Bitcoin crashed, leading the rest of the cryptocurrency markets lower with it.
Bitcoin crashed because the smart money made the dumb money look stupid.
The dumb money
When Dave Portnoy is buying Safemoon after a press conference like he's Lebron James announcing that he's taking his talents to South Beach, there's obviously a lot of dumb money in the market.
We've seen Dogecoin ripping faces and if that wasn't enough, then a cryptocurrency called CumRocket doing 100x because a few birds on Instagram told their followers to buy, should probably seal that dumb sentiment.
If you're an idiot TikToker or reckless Mum who's recently plowed your family's entire life savings into a single investment this late because someone famous told you they're going to the moon, then sorry not sorry, but you're dumb money.
While crypto might be all fun and games on the surface, it's still dominated by the same institutional money who's sole purpose in life is to transfer what little you have across to them, adding to their ever-expanding digital fat stacks.
Now that process has played out exactly like it always does, nobody is coming to give you back what you feel was stolen from you.
Welcome to the financial markets.
The charts show this transfer
This transfer is shown right there on the Bitcoin chart.
We'd been talking about how outright ridiculous the Bitcoin monthly chart was looking since back in March, but things had started to weaken.
Just take a look at the price action the daily chart leading up to the snap.
Bitcoin (BTC/USD) Daily:
Bitcoin printed that $65K top which looked fantastic, but as soon as the bulls failed to make a new higher high, that was the beginning of the end.
By then, we had Elon being a twat about Bitcoin's fossil fuel use (I mean come on...), and the market was primed for a correction.
And boy, a correction did we get.
Once the bears started pushing Bitcoin toward the 40K support zone, they knew that a move below would set off stops galore.
Price went through and anyone long on leverage was forced to capitulate their position.
Which in turn caused others to capitulate their positions just that little bit lower and the snowball gathered speed.
A snowball of stops gaining speed until they hit the next mountain of support at 30K.
Funny how that just happened to be a juicy support zone from the January pullback, huh?
Bitcoin (BTC/USD) 15 Minute:
But as you can see from the intraday price action, once the capitulation was over and price found support, normalcy returned.
Normalcy that saw the smart money take advantage of all that juicy liquidity required to get their own longs on.
At a good price of course.
What, you thought that they were going to pay retail prices at the top like you TikTokers and stay at home Mums?
Nope, they manufactured a beautiful capitulation event in order to get their order in at a discount.
All thanks to you :)
Bitcoin "crash" update
While we keep reading both in mainstream crypto media and on socials that Bitcoin has crashed, it really hasn't.
I view the price action of Bitcoin as a healthy pullback and the fact we continue to trade within a clearly defined 30-40K range, backs this up.
There was no Bitcoin crash and this is no bear market.
Relax.
Best of probabilities to you.
Direct from the desk of Dane Williams.
Why not leave a comment and share a Bitcoin chart of your own in the comments section below? All comments that add something to the discussion will be upvoted.
This daily market analysis blog is exclusive to leofinance.io.
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I agree. You can always listen to a TikToker, but don't cry when it turns out to be a failure.
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If you're listening to TikTokers for investment advice, just make sure that you know those in early are the ones selling to you as you're buying.
When you're talking about coins like CumRocket with huge team holdings, they're also selling with a lot more volume than the buyers too.
Price only has one place to go in the end...
But hey, as long as you're not the one left holding the bag in the end, you're all good :)
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Like that idiot mom who follows celebrities on social media, I've seen a lot of people...
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Mums are the best:
Imagine doing this interview though hahaha.
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I read that on cnn, that a whole family invested in shib.
But the case I am talking about is different, people invest blindly without verifying anything.
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I guess over leverage is the real cause of this dump and that's another example of greed. Curious that not only experienced traders are leverage trading, as I have mentioned about some guy in my last post that got rekt yesterday. He doesn't even understand crypto too good but he's leverage trading. I believe that this stage of shitcoins pumping like what we had with Elon and DOGE will be over soon. The bull market is not over yet and we haven't had mass euphoria yet.
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The real issue is leveraged trading without a risk management strategy.
If you aren't managing your risk properly as a trader, then sure you can win 99/100 of your trades...
But it only takes that 1 trade that goes against you like we saw in this Bitcoin crash and you wipe out your entire account.
Those that got truly wrecked margin trading during this crash can't honestly explain how they properly managed their risk because they just didn't.
I'm still of the opinion that a good leveraged trader closes more trades at a loss than in profit, but still makes money by letting those winners run.
On margin, you want lots of small losers and then to let your winners run big.
Anyway, I'm with you that this bull market isn't over yet.
This was nothing more than a small correction and you can see on that Bitcoin daily chart above that the smart money buyers have already stepped right back in.
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Once people started to buy every crap coin possible, dumb projects being launched for a quick money grab and people listening and basing their investments on tweets I knew it was about to blow up at some point. Glad I took some profits at the high point it made it possible to boost the bags a bit when it feel yesterday.
For some reason though people seem to be already repeating the same mistakes investing in pure crap again thinking they are going to hit it big. Latterly dumb people and dumb money but instead of complaining about it and trying to tell them I'm going to start taking from their mistakes as others do. They simply just wont ever learn.
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Good to hear you took some profits at the top before the crash.
You have a pretty decent HIVE investment, but do rotate profits over to stacking BTC?
That's always gotta be the ultimate goal in the crypto game, doesn't it?
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For Hive and the tribes it's fully 100% investment right now as I have goals I want to hit here by end of year to start building some projects.
Besides that I pool in BTC, ETH primary with some in stable coins as a "back up" the stable coins have been a recent addition. Other then that I'm starting to get into DeFi a bit more but that's all "fun" crypto for now since it's extremely high risk and I seriously hate pulling coins out of my own wallet I don't like giving up ownership like that.
Obviously running into an investment without thinking is bad but I think I were seeing random people mentioning that they were taking out leverage near the top. Which of course was fairly bad and I fully expect it was done to liquidate anyone in the futures market since they probably didn't have enough to back their own margin.
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Reckless, dumb money.
That's the only way to describe that level of margin trading with a complete disregard for risk management principles.
As I said in one of the comments above, if a trader isn't managing their risk properly, then sure they can win 99/100 of their trades but it only takes 1 to go against you and it's game over.
1!
This so-called Bitcoin crash, was the 1.
Those that got truly wrecked margin trading during this crash can't honestly explain how they properly managed their risk.
Dumb money!
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You have done a very good analysis of it.
There are many reasons for Bitcoin crash and I agree with your points.
I think crypto is following Elon Musk. China has also an impact on this price downfall.
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The CNBC headlines will tell you that the market is scared of China.
But the reason Bitcoin crashed is because the smart money devoured the dumb money.
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The market is not anyone's friend and the market is always right. I almost felt like crying yesterday. I am just happy i bought cub and most of what i have is linked to hive and usdt.
I feel for people who listen to celebrities as their signaal for buying into a coin
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I'm sorry to hear you felt that way mate, these Bitcoin crashes are never kind on anyone's psyche.
Manage your risk and hopefully it will help you to not feel that level of dispair on days like that.
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