Why The Recent Pump In Bitcoin (BTC) Could Be A Smokescreen

The recent pump in Bitcoin (BTC) is bound to get many retail traders excited once again and have them hoping for a rally to $8,000 or higher levels. This is to be expected because investors in this market often tend to forget that certain things keep happening over and over again in this market. There always is a method to the madness. The price of Bitcoin (BTC) does not just up and pump more than 5% one day just after it had declined below $7,000 and exposed serious weakness. Meanwhile, all of this is happening in the midst of a very important but rarely talked about development in the forex market in general and the EUR/USD pair in particular. 

It is surprising to me how most analysts and investors choose to so conveniently ignore or perhaps overlook the major factors that drive the decision making in this market. The reason I say decision making is because this market is run by a small number of powerful players who control everything from the daily price action to what patterns to print to when the market pumps or crashes again. It is done in a way that it looks orderly, reasonable and respectable but it does not always stay that way when there is so much manipulation and at certain turning points, we observe quite clearly what is really going on behind the scenes. The daily chart for EUR/USD clearly shows that the pair has now declined below the 200-day moving average which is a sign for the big players to get out of the market.

Those of you that have followed the forex market for a while would better understand how the banks play the average trader. The price ends up doing the exact opposite of what most people expect at a certain time. Now, those people may not be wrong about the direction but they are wrong about the timing because they don’t see the game plan. Like Sun Tzu says in the Art of War, “If you know yourself and your enemy you needn’t fear the results of a thousand battles.” The enemy here is the market maker. 

Most new traders don’t know that large financial institutions have an entire market making department. Even a lot of brokers and exchanges have it which means that they use their money to trade against you. Think about this for a minute. They know where you have placed your stops and they can still trade against you. So, when BTC/USD is about to decline and everyone is all bearish, what do you think they are going to do? They are going to run those stops and liquidate as many bearish positions as possible. That is precisely what happened here at a time when the big players are busy cashing out. It would not be surprising at all to see a big crash follow after more retail bulls have FOMO’ed in and bought into this pump.