Sheer Madness And Like The Wild West
Cryptocurrencies have always been volatile and the hope one day they settle down as they mature is just a pipe dream for now. Don't get me wrong for now it is quite alright by me as it gives us all an opportunity to score more coins and make bucket loads of money if you are capable of trading correctly.
The problem I have is the leveraging that is creating the volatility has to end at some point. What happened to an exchange just making money off trades and running a decent honest business? I do understand their point of view as it is making them a ton of money having this extra curriculum on the side and we are talking Billions of dollars.
I have never taken the time to understand leveraging as maybe it would be too tempting. I just could not gamble with what I have no matter how high the stakes are. I will stick to the more regular path of trading as the opportunities created by this mayhem is mind blowingly good.
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There have been some serious liquidations happening this year and why Bitcoin is moving around like a yo yo hitting longs and shorts all being manipulated in most cases by the exchanges. The dip we are seeing now was expected and called out by many traders as they know the exchanges have to liquidate the shorts. It will be interesting to see what the final figures for liquidations will be this year compared to last year. 2020 was meant to be big for liquidations topping over 13 Billion on only 2 exchanges so if we add Binance into the mix which is now offering 125 x 1 this figure is going to rise quite considerably this year.
I expect that at some point this has to be regulated as this is a bit like insider trading. The exchanges are making far too much profit at the expense of their customers. They are playing the role of house in the casino and this is not really investing but gambling with high stakes. The exchanges can manipulate the market dropping or increasing the price as they know how much is at stake if they have to pay out. Imagine knowing you can earn $1.8 billion within an hour and it may only cost you a portion of that to tank the market.
I hope the regulators stay off this for now and let it be as for traders this is fantastic and creating some massive dips which is more opportunities to buy. The more Bitcoin goes up the bigger the volatility will be across the entire crypto sector. I was wondering about it today as could you imagine having $50 000 swings in price movement when Bitcoin gets to $200 000 and this would be just too tempting to resist if people are gambling/leveraging when Bitcoin is at $40 000 - $60 000
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Blimey. That really does sound like the wild west. I didn't realise the exchanges part in the volatility. I thought it was down to individuals and organisations doing the manipulating.
I've been thinking this for a while now. It's going to be a very bumpy ride think. 😁
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This is just too convenient to blame institutions and whale accounts for the manipulations. If you were an exchange and were allowed to do it then you would and they are.
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Indeed, eventually regulators would have to come in to bring in some form of stability to the market. I also hope that is delayed a move in that direction now would be premature
Who's going to regulate the regulators?
Charles Mackay said : “Men, it has been well said, think in herds. It will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”