{"id":21592,"date":"2022-01-22T21:06:39","date_gmt":"2022-01-22T21:06:39","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=21592"},"modified":"2022-01-24T14:20:28","modified_gmt":"2022-01-24T14:20:28","slug":"bitcoin-goes-down-and-time-bombs-are-waiting-in-the-market","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2022\/01\/22\/bitcoin-goes-down-and-time-bombs-are-waiting-in-the-market\/","title":{"rendered":"Bitcoin goes down \u2014 and time bombs are waiting in the market"},"content":{"rendered":"

Bitcoin is crashing, sell sell sell! BTC-USD on Coinbase was at $43,511 on Thursday 20 January, but has been skating down since, and has been knocking its head against $34,000 for much of today.<\/p>\n

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Who cashed out?<\/h3>\n

It\u2019s not clear why this particular<\/em> drop happened. The usual answer is \u201cshenanigans\u201d \u2014 the Bitcoin price is known not to respond much to market signals. The market is thin enough and unregulated enough that internal manipulations swamp external signals.<\/p>\n

Kevin Werbach and Brian Feinstein of the Wharton School, University of Pennsylvania, wrote the standard study on the topic, focusing on BTC and ETH. Werbach tweeted: \u201cUnder every model, no significant impact of regulatory announcements on volume; virtually none on price.\u201d [SSRN<\/i><\/a>, PDF; <\/i>Twitter<\/i><\/a>]<\/p>\n

When real markets catch a cold, Bitcoin gets COVID \u2014 as happened in March 2020,<\/a> when Bitcoin crashed in lock-step with all the other markets. The regular stock market is worried about Russia invading Ukraine, but hasn\u2019t gone down hard yet<\/i>. (Or at least not on that scale.) I think the last time Bitcoin moved on real-world events was when China kicked out the crypto miners in May 2021.<\/p>\n

You should always assume shenanigans first. Were there a lot of long margin traders who needed to be burnt?<\/a> Who needed actual dollars in a hurry? That sort of question.<\/p>\n

I\u2019m pretty sure the root cause is that retail crypto investors mostly went home a while ago \u2014 the mass-market phase of the 2021 Bitcoin bubble seems to have run from February 2021, when Elon Musk announced that Tesla had bought bitcoins,<\/a> until June 2021, shortly after Tesla sold. Crypto is suffering a supply chain shortage of greater fools.<\/p>\n

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\ud83d\udea8 \ud83d\udea8 \ud83d\udea8 \ud83d\udea8 \ud83d\udea8 \ud83d\udea8 \ud83d\udea8 \ud83d\udea8 \ud83d\udea8 \ud83d\udea8 1,000,000,000 #USDT<\/a> (1,000,000,000 USD) transferred from Tether Treasury to #Binance<\/a>https:\/\/t.co\/pctmfmlhGy<\/a><\/p>\n

— Whale Alert (@whale_alert) January 22, 2022<\/a><\/p><\/blockquote>\n