Bitcoin (BTC) has seen good days and bad days throughout its trading history. The last bear market began in 2014 and lasted till 2015. During that period, the Mt. Gox hack accelerated the fall of BTC/USD. So, the decline as well as the capitulation that followed seemed quite natural with little to no signs of any manipulation. Of course, there is manipulation in every market, but we are talking about the sort of manipulation that is too obvious to ignore. If we compare the 2014-15 bear market to the current bear market, we see a lot of similarities in the charts but things look completely different on ground. Bitcoin (BTC) is no longer considered a scam by a large majority and its future outlook has never been better.
Those are compelling reasons in themselves to have prevented the price from dropping with the same intensity that it did in 2014-15, but it gets more interesting. There is no Mt. Gox! So, why then is the price falling with such intensity even though most people have no reason to sell at these levels as they believe the price is going to recover soon after they sell and thus they will have to pay more to buy back the coins they sold? Well, there is only one possible explanation to this which is that everything from the forced ‘capitulation’ to every subsequent drop has been the work of market manipulators. To analyze this further, let us look at the above 1H chart for BTC/USD. We are going to be analyzing the price action after November 20 because that is where the naked manipulation kicked in when the four years long trend line and a critical support were simultaneously broken.
Looking at the chart above, you can see that all the three recent drops have a lot in common. All of these drops take 9 hours and they come to completion around the end of the trading day. The first drop began at around 16:00 UTC and came to completion around 01:00 UTC the next day. The second drop then begins in 1 day and 16 hours and comes to completion on 02:00 UTC the next day. The third drop also starts in exactly 1 day and 16 hours and comes to completion on 03:00 UTC the next day! If you look at this pattern, one thing is very clear which is that this has nothing to do with real buying and selling. It is more likely to be algorithmic manipulation that strikes in the dark of the night when the volume is low and the trading day is about to end.
Bitcoin (BTC) has now broken a four years long trend line, a critical support and it has also broken below the 200 Week EMA. Meanwhile, the Nasdaq Composite has yet to break any historical trend line. The EUR/USD has not invalidated the Inverse H&S. Until recently, BTC/USD has been following both of these markets and we believe that it will still do that in the long run. Even though weekend trading activity is considered inconsequential for the most part, this recent manipulation has done irreparable damage to most small projects that are now out of funds and declaring bankruptcy. A lot of mining companies have gone belly up and as the dust settles, we will see more companies filing for bankruptcy.
What does all of this mean? It means that the general public will go after these companies to get their money back who in turn will go after the SEC to bring market manipulators to justice. This whole cycle is going to inflict more pain on cryptocurrency investors who after this so called capitulation are happily waiting for a bull run. While the Mt. Gox hack provided cover for a lot of manipulation to go unnoticed, this time the situation is different and the SEC is in a better position to deal with it. The hashwar in the recent past between Bitcoin Cash ABC and Bitcoin Cash SV exposed some of the most chilling incidents of manipulation in the market where not only the price was manipulated but public funds were illegally used to fund wars. As the market recovers, a lot of such companies and individuals are going to find themselves behind bars who over the past few weeks have abused every law and regulation with impunity.