When BTC Futures were introduced by CME and CBOE, most Bitcoin and cryptocurrency patriots were over the moon. Don’t get me wrong, this was a great accomplishment, something which is good for the price of BTC and cryptocurrencies in the long run but what most new investors ignored was the element of manipulation.
Now how does that work? It’s quite simple actually. Let’s say you are a whale. So, you go and you buy Bitcoin. You tell your whale friends to buy Bitcoin. You push the price to a psychological level like $20K. When everyone in the news start talking about Bitcoin’s parabolic growth and how this is unhealthy and artificial, you go to CME and CBOE and you buy BTC Shorts. You tell your whale friends to do the same. Once you guys are done, you start dumping systematically. Meanwhile, you and your friends are getting rid of your Bitcoin while making a fortune on your BTC Shorts. When you have sold your BTC and cashed out on all your BTC Shorts, you take all that Original Money + Your Profits and you buy more BTC to start the Next Pumping Series. You keep pumping the price systematically, this time to a new high. When the peak is reached, let’s say at $50k or $80k, you go again to CME and CBOE, you buy BTC Shorts and you start dumping your BTC. Rinse and repeat.
Now as you can see this is good for the price of Bitcoin and other cryptocurrencies long term but don’t make the mistake of thinking that you can make money both ways unless you are a market maker. So, what should you be doing? Buy low, at the bottom and sell high, at the top. It’s important to pay attention to technical analysis and news but what’s more important is a good understanding of market psychology.
Patterns and formations on charts do not form on their own particularly in manipulated and unregulated markets. There is a lot of talk about the need for regulation and control which would benefit the common investor but the truth of the matter is that investors with big money and bigger influence do not want regulation, at least not yet before they are done shopping. It is no surprise that the first dip occurred on the very same day BTC Futures came into existence. Analysts who are calling for a bear market ahead are missing the essential element of “intent”. You have to ask yourself, “Cui bono?” or “Who Benefits?”
It is not in the interest of anybody to kill this game. The recent 70%+ correction makes a good alibi for the next bull run and big financial institutions can once again make money both ways. They are aware that cryptocurrencies are here to stay and much like prohibition, if cryptocurrencies are outlawed, their demand will only increase. Realizing this, they are prepared to join the game but before they jump into the pool they need to scare the small guys. Putting things in perspective, I would say they have done a very good job of it so far and it is only a matter of time before they fill their pockets and then open the floodgates to push Bitcoin and altcoins to their new highs for 2018.