Crypto Market > 50% probability of moving lower

BITTREX:BTCUSDT   Bitcoin / Tether
Note this is a LOG chart and GDAX pricing. Other non-fiat exchanges tend to be $100-$200 higher and even as much as $300+ during periods of high volatility/uncertainty in the market.

Based on the breach of the 200 EMA and the closing in on the March 25, 2017 trendline and the 300 weighted MA we're likely to see some heavy support along this price level.

Current order positioning suggests the market will be balanced between 8k and 8750 unless a trigger comes along to push it lower ( aka FUD).

Technical indicators and historical probability strongly suggest an eventual push to the $6k level but heavy support in the $7500-$8100 price range would suggest at least a month duration before seeing that price level unless some FUD triggers another panic. Current market conditions do not favor growth as regulatory concerns, the high frequency of scams, and malinvestment/speculation in shitcoins ( aka XRP, TRX , etc.) will likely continue pushing the market towards consolidation before reversal. History shows that BTCUSD needs to hit around 30% of its ATH before reversing reliably. That would indicate the $6k price level based on the recent ATH of about $20k.

Current order positioning suggests a 50/50 probability of price movement in the range between $7.5k and $9.2k (GDAX) in the very near term (i.e. today). Given upside potential on a long position of 140% off the mid-point of this range over a 6-12 month duration and downside potential of 40% with a weighting of 60% to the downside and 40% to the upside, this results in a probability based gain of around 25% or roughly 1:4 risk / reward.

Depending on the chart and order book analysis it may not be prudent to enter the market at $7.5k unless we see that price before Feb. 4, but generally speaking a long position of about 25% of your trading fund would have a high probability of generating a return over a 6-12 month duration.

In general an allocation of 60-80% of funds to fiat for trading shorter duration swings in price will be likely to generate profit over the short to intermediate duration (1-2 hours up to a month if necessary) due to how close we are to a reversal. This could depend significantly on the regulatory environment and Feb. 6 will be a major event as SEC Chair Jay Clayton talks about crypto with the US Senate and this could strongly influence price action based on statements made that day.

If I were you I would watch the hearing live on Feb. 6 10 AM (EST):


and make appropriate trades based on sentiment gained from the hearing. My guess is that any hint of negative sentiment will trigger lower prices while ambiguity may lead to a mixture of false movements that could mislead you into thinking the market is strongly reacting one way or the other.

The SEC has generally been fair in avoiding market moving actions as they gently warned the crypto community with a letter and let the DAO off the hook by not categorizing as an unregulated security. However, enforcement action is trending dramatically higher, and any highly speculative crypto investments (such as BCC , TRX , XRP) with questionable leadership should be held with caution. Given the prominent role of ETH in the ICO market it might be a good time to rebalance your holding with some NEO which appears to have a strong team and a heavy emphasis on compliance, self-regulation, and accountability.
Kommentar: getting a pretty strong bounce right now but we need to break $9k for some positive momentum to build and order positioning suggests heavy selling pressure around that price level (i.e. resistance).

It might be worth trading in the $8150-$8500 range for 2+% gains over the next few days. Should price build momentum above $9k then we could see a symmetrical triangle form around the $9k level. If price reverses around $9k-$9,050 then the triangle will be around $8660-$8700 with a much shorter duration.

This could all be interrupted by whatever happens in the next few days or the SEC Jay Clayton Senate hearing.
Kommentar: I meant to say should momentum push price closer to $10 then $9k would be the central level for a symmetrical triangle. But this seems highly unlikely without some kind of external trigger.
Kommentar: Big sell wall at $8.9k and $9k. Will need a lot more buyers to enter the market to push past this level. I don't really get why traders can't see this because to me it's like watching lemmings running off a cliff. Why would you enter the market when you know the price is about to go down?

Just based on order positioning the bearish sentiment is significantly greater than bullishness at the $8900-$9700 price level. Given the current momentum in the market maybe we'll see a push above $9k, but I wouldn't want to buy at $8800+ to find out.
Kommentar: I can see definitely see a quick retreat back to $8700 now.
Kommentar: Looks like we should blow through $8900 now. Bulls are really digging this cliff. Ride or Die!
Kommentar: I guess some bulls changed their mind. Looks like $8900 will be the top of this rally but who knows, if Bitfinex has buyers to push it past $9.1k then GDAX could follow. But given the sell wall at $9k it seems more likely that GDAX will pull down whatever momentum Bitfinex is building.
Kommentar: Looks like this stupidity is going to play out for a while. Often when support/resistance areas are tested in the early AM hours it can take so long for any meaningful price action to occur that it's simply a matter of which side wears out until the higher volume hours. In a couple of hours it will be 6 AM EST and usually smarter money starts to win out when volume picks up. I can see a quick retreat to 8600 by 6 AM EST but bulls are really digging the 8800+ price level to buy into the market. You never really know but Bitfinex prices are converging now below $9k so this reversal could pick up soon.
Kommentar: The market is remarkably orderly compared to yesterday and the day before. I forgot that it's Saturday so come 6 AM EST there won't likely be a volume bump. You never know with weekends. Usually there's an excessive amount of panic selling through the weekend, and given the proximity of Feb. 6 10 AM when Jay Clayton speaks to the Senate, I'd be concerned about buying in off of negative momentum chasing the bottom of the next price move too close to this hearing but if we see $8100-$8350 before the middle of Saturday then there could be enough momentum for a $8600-$8800 exit before Monday's hearing.
Kommentar: Based on current order volume at the $8k level I can see this price target getting hit, but sellers seem fairly disciplined right now. Yesterday they were just freaking out and perhaps if the price trends back to $8k we'll see the "weekend panic sell" phenomenon and a dip to $7700. Who in their right mind decides to panic sell below $8k after a 20% drawdown like on Thursday AM? That alone freaked me out enough not to buy in even though I was awake (barely) and committed to a big order, which in retrospect went against my trading logic. At a minimum I should've committed 20-50% of my tradable funds to a position. It's critically important to have a solid supply of energy drinks to think clearly during insane trading days like Thursday. I learned my lesson.

With the strong support/resistance between $8800 and $9k I can definitely see a symmetrical triangle forming, but if there isn't much price action between now and Sunday morning I can see this SEC hearing knocking things out of that pattern. The probability will be relatively high for a breakout lower after that hearing but perhaps only a quick bounce to the $7.8k-$8k level as bulls push for the March 25 trendline. If that trend doesn't hold then it will remain to be seen if the lower channel trendline can hold. It seems relatively probable that we'll see a few days of sideways price action from $8k after the hearing possibly creeping along the Mar. 25 trendline before a break back to the $7.5k level which will hopefully bounce off the lower channel trendline back towards the center of the symmetrical triangle (hypothetical) around the $8.6-$8.7k level.
Kommentar: A key takeaway from the selling frenzy of Thursday is that as the market freaks out price discovery becomes wildly unhinged with different exchanges trading at wildly varying price levels. At one point there was a $400 spread between Bitfinex and GDAX as price plummeted below $8k on GDAX. This would have been over 5% spread.

It helps to have a clear trading plan with multiple sets of price target entry and exits and probability based order sizes written down when the market gets crazy so you don't get overwhelmed by the urge to act impulsively (or stupidly) and go off script.
Kommentar: oops, I just realized this was a BTCUSDT chart not GDAX. So the price levels are close but not really consistent with what I'm actually looking at.
Kommentar: Bulls are really fighting to hold this 200 EMA despite a huge sell wall coming at 9k and 9.1k
Kommentar: I went to bed so I'm not sure where the buy volume came from to push the price past 9100 but maybe people in Europe trade crypto Saturday morning or some people who panic sold FOMOed back in. Market looks much more bullish now above $9k. Total volume dropped by 50% from yesterday. Total on-chain transactions barely moved 2/1, which suggests a lot of weak hands flushed out of exchanges. https://blockchain.info/charts/n-transac...

I don't really see enough buying pressure to push past $9.5k but who knows... weekends can be completely unpredictable. Order positioning above $9.6k suggests strong resistance between $9.6k and $10k.
Kommentar: This weak rally above $9.2k looks like it could bounce around the $9k to $9.4k range for a bit. If bulls can hold out long enough perhaps volume will pick up as Asia wakes up.

Since Thursday the market has lost 25% and regained 25% in 2 days. Hopefully some of the weak hands in this recent dip will learn to better allocate their portfolio so they don't have to panic sell every dip.

Notably, when the market hit $8k on Thursday, GDAX traders were panic selling to $7500 while the rest of the market appeared to be buying anything below $8k which caused a massive spread of around 5%. This suggests to me that GDAX/Coinbase users have a lot of weak hands who don't really understand the market or were generating market orders that pushed prices lower. Perhaps Coinbase should refine their buy/sell mechanism so price discovery is more transparent for non-GDAX users.
Kommentar: What's interesting too is that ETH, BCH, XRP, and XMR haven't really bounced much relative to BTC in this rally, which suggests a lot of the market consolidating to BTC.

LTC has bounced pretty significantly in BTC terms, which suggests consolidation to LTC. ADA also bouncing pretty strong in BTC terms which doesn't mean much other than it probably got oversold in this latest correction.

NEO looks to be correcting in BTC terms, which suggests a more prolonged decline as it comes off its ATH.

Given the amount of XMR now being circulated by criminals and hackers and how much of the network is being mined by rogue operators I can see some potential for negative price action as a result of bad actors trying to launder their funds with BTC.
Kommentar: I went and took a shower and missed an opportunity. Probably should pay more attention to myself and set trade targets when I'm talking out loud. A relatively small order with entry at <9200 with an exit ~9400 would have have been 2+%. in an hour.
Kommentar: Market still looks pretty bearish around $9500 and the range looks to be tightening between $9300 and $9500. With a bit of volume bulls could easily push this higher but current order positioning makes this seem unlikely. Bitfinex and GDAX are trading with almost no spread so a bigger move down could follow a bit of sideways price action. It's hard to say when that might happen but the current rally is pushing about 15.5 hours now and $9400 has been touched twice.

Not sure it would be prudent to make any trades on a reversal of this high. An ideal target for entry would be between $8250 and $8500 within the next 12 hours with an exit between $8700 and $8900 depending on order positioning by Monday morning in the US.
Kommentar: The sell wall around $9500 is pretty massive for a low volume day so if there's a rush to chase this dip down then we might see a quick run back to $9200 but $9300 looks like it could prove tough to break for a while. Probably gonna be a boring day.
Kommentar: I didn't really think about this because I haven't been trading today, but I probably should have suggested a possible short term trade for the $8.9k to $9k price target knowing this would be an area of strong support once $9200 was broken. This would have been a 2.2% gain for $8900-$9100 or $9000-$9200.

There still appears to be enough order volume positioned at $8900 to keep this bouncing around for a while but this is all pennies in front of the steamroller. Any kind of trigger could push things lower. The market is definitely in a bit of a lull right now and the SEC hearing could shake things up again.
Kommentar: I'm not so sure there's enough support at $8500 for a bounce back to $8900 given the slight bearishness in the market, but this prediction is basically 50/50 but another possible "knife catching" trade with a small position to catch some profit during this lull.

In general a trade at $8500 still poses relatively low longer term risk and good risk / reward even if it ends up being a "hodl" through another 30% dip as market positioning appears to reflect. The next big buy wall has now pushed to $7500 and there could be some bigger trade opportunities between $7.5k and $8.5k depending on market signals and external triggers. Overall, a lot of bullishness still sits below the $6800 price level so this weak rally might play out over a two week period like before or perhaps some negative trigger will wreak another round of chaos and a period of bouncing around between $5.5k and $8k will trigger an overall reversal (that could require a lot of volatility over a period of 2-3 months).

Volume has completely dropped off a cliff so this slow ride down could turn into a battle to break $9k over the next day or so. Not really a great place to buy and not exactly huge short term opportunities here so it makes sense the volume will dip hard again until there is something to trade about.
Kommentar: Given the extreme rebound in LTC off this dip I would probably move at least half of my position to a buy into Litecoin with the next dip at anything $115 or lower.
Kommentar: LTC XMR took a wild swing today. I sold off a LTC position to XMR for a pretty decent XMR gain. My expectation is that Monero has been hit hard lately and will resume its positive momentum. XMR previous to the last three rounds of BTC drawdowns had been extremely resilient and I feel that overall XMR has significant potential from new exchanges, hardware key, etc.

Hopefully the market can weed out some of these bad actors that are hurting its reputation but the real test here is can the community tolerate censorship resistance while many known bad actors are using the coin to commit crimes?
Kommentar: That sell to XMR was kind of impulsive. My feeling generally is that LTCBTC will continue to push for a new ATH as it is coming off a bull flag that had a break down with a big reversal.

However, XMR generally still has more favorable upside potential in my book and my expectation is that LTC will take another big dip down in USD terms when BTC goes for what seems like a highly probable final correction before reversing.
Kommentar: Not much buy volume above $8.8k. Looks like it will bounce off $8.8k though.
Kommentar: Still a lot of support above $8.6k so this could be a decent target for a short duration trade. But I gotta sleep.

Market decidedly bullish above $8380 right now and 24 hour BTC volume looks like it could dip below $1 B. Probably could make money trying to buy around $8.6k and selling around $8.9k, so another 2-3% gain.

Given the low volume anything could happen in the next 12-24 hours.
Kommentar: It's like locked horns between bulls and bears (with no horns) at 8826.25. Pretty impressed with how orderly this trading is. Wonder if we're seeing a bunch of trading bots going at it as I noticed quite a bit of buy volume pull back to $8700-$8750 level.
Kommentar: It doesn't look like there will be a bounce at $8.8k. Lots of selling going on.
Kommentar: Definitely some algo trader working here as buy volume just pulled off again to $8700-$8710.
Kommentar: Buy volume really building around $8700 now so these look like real buyers.
Kommentar: Almost no spread between Bitfinex and GDAX so that usually means the market is fairly confident about which way the price is going to move.
Kommentar: The market hit this price level almost 24 hours ago on the way up and needed 3-4 hours to break through. Probably will be similar coming back down.

Not really much on the chart to guide you and given the low order volume anything could happen. I'm not likely to enter a trade above $8.5k BTC or $125 LTC.
Kommentar: Not saying LTC is going to lose 20% of their current price. It was clearly oversold so probably will see a bounce (or a lot of support) at $145 if it even gets there in the next 12 hours.
Kommentar: Given the way LTC sold off in such a panic my guess is that LTC is being held by a lot of speculators and/or non-GDAX Coinbase users that don't know how to set limit orders to prevent the entire market from getting dragged down by dumbasses. Hopefully they learned something so we'll see how the next big panic sell unfolds.
Kommentar: I cancelled my buy for $8250 last night because I didn't want it to execute while I was asleep and missed the entry by about $10. Still, this would have been a higher risk:reward trade as sell pressure still looks moderate around $8500.

Buying pressure is growing above $8320-8350 but this could positioning could pull back to drag price lower so probably safe to wait for some clearer market signals.

Probably will see price action between $8250 and $8450 for some time so not the worst trade but less than 2% and on low volume, which means this price action could dry up at any time.

Looks like we got a bounce off $8.5k at 7:30 AM EST that bounced to $8.8k+ (3.5%+ gain) in 1.5 hr so it appears the biggest bounce happened at $8.5k then after the second touch off $8.8k buyers pulled off to around $8.3k
Kommentar: Looks like the $8.5k level will get battled over for a bit. Could still see a low volume move up to $8.8k which would be a symmetrical reversal of the previous move but given the relatively low (but constant) volume and the Super Bowl there might not be a lot of price action going into the evening and early morning hours.
Kommentar: Buying pressure looks to be easing off the $8.3k level so we could see a dip to $8k-$8.3k pretty quickly.
Kommentar: There definitely appears to be either a colluding effort or some bots that tend to aggregate together by recognizing order flow so it would be wise to follow that money. It looks like ~$8320 is where buyers are camping out but this could get pulled lower. It's a game to pull the price down as low as possible to optimize the bounce.
Kommentar: I should say "bounces" as there could be quite a few HFT type algo traders at work here.
Kommentar: Given that some algo traders and/or retail traders go off of indicators that suggest the opposite price movement this can lead to mixed market action that doesn't entirely make sense but this $8.5k level will probably need to be touched a few times before there is an exhaustion of buying volume. That being said volume has increased somewhat steadily over the last 24 hr (by about 10%). This doesn't really mean anything but it does suggest the potential for a continuation of panic sale weekends.

It looks like if you bought in at $8350 you could have exited at $8550 for a 2+% gain. Not bad, but also not a lot of volume so a fairly narrow risk window for entry and exit.

It looks like this battle between $8.3k and $8.5k will continue for a while so I'm taking a break.
Kommentar: Definitely looks bullish at $8.5k now. I think we could see $8.75k again.
Kommentar: Totally unrelated, but the Mormon ethic of trust precedes their sense of honesty, and this distortion contributes to an unusually high participation rate in scams (as perpetuators and followers). One could apply that general rule to any group of people that tends to fall for scams. Build trust by breaking down someone's "honesty radar."
Order storniert: Looks like that volume dried up pretty quickly... looks like selling picking up...
Kommentar: A bit of a weak buy wall at $8200 doesn't really look like it will hold unless a bunch of buy volume shows up so I wouldn't advise an entry here though we could see quite a bit of price action in the $8k-$8.25k area so probably best to follow the herd if enough buyers enter. The bigger buy wall is at $8k so if they consoildate to $8.1k that should be sufficient to push the market for an $8.3-$8.35k exit.
Kommentar: Entering orders is a bit like bidding on ebay. You don't really want to signal too much or you affect the market so it's important to watch other market signals to determine if they're real buyers or signalling to move the price.
Kommentar: $8150 probably not going to hold...
Kommentar: Not really a lot of sell volume (relative to buy side) so sellers will be able to dictate the bottom of this move here. Desperate (clueless) sellers could push this lower than it needs to go.
Kommentar: There's clearly a lot of fear in the market now. I don't see discipline which suggests a retreat below $8.1k if these algo trading bots pull volume back accordingly.
Kommentar: Probably a good idea to enter around $8.1k looking for a bounce.
Kommentar: The market's not really coordinating very well between $8.1k and $8.16k so this bounce could end up being pretty weak unless this all consolidates closer to the $8k orders. There's a definite fear of breaking $8k and seeing total chaos again so caution is warranted here as market psychology and trading bot price action will influence whether we see a bounce off $8k or a full scale retreat back to $7.5-$7.8k.
Kommentar: It's getting pretty hot and heavy now around $8.2k and 24 hr volume has picked up. Order signalling seems to suggest $8.2k might be an optimal primary entry target with a secondary at $8k if the bounce doesn't happen.
Kommentar: Price on Bitfinex has pulled higher so this dip could consolidate to $8.25k
Kommentar: Sellers look to push this to $8.2k
Trade ist aktiv: Buy volume consolidating to around $8.1k very nicely. Definitely entry target soon....
Kommentar: Dumb panic selling now at $8k otherwise we'd be seeing a bounce...
Kommentar: Sellers control this market now but it still looks like a lot of dumb selling going on.
Kommentar: Bitfinex/GDAX spread getting pretty tight now so this could signal the end of this panic sale...
Kommentar: There's definitely enough buy volume to chase this into a decent rally. It will really depend on whether weak hands decide to crater at exactly the wrong time...
Kommentar: The bounce off $7950 was pretty weak and order signalling would suggest that a lot of these sellers just hit market sell. In many ways sophisticated buyers/traders looking for the best deal scare these weak hands into folding at exactly the wrong time.
Kommentar: It's crazy how Bitcoin volatility can be entirely driven by the crappy liquidity that occurs from market fragmentation. Literally a handful of dumbasses hitting sell can move the entire market.
Kommentar: It's almost comical how people panic sell at literally the completely wrong time and then buy into the top of the market.
Kommentar: There's virtually no order positioning to sell below $8.1k yet these sell orders just keep on coming... It's hard to call the bottom but the chart would suggest $7600.
Kommentar: It was like I blinked and we got a bounce. If sellers can chill we should see a rally back to at least $8.5k
Kommentar: Basic trading strategy: any time Bitcoin is 15% off you BUY, not SELL.
Kommentar: After dipping nearly 50% off its ~$20k ATH BTC retraced nearly 86% of that dip within 3 weeks. Which means if you bought at the midpoint of that dip (~$15200) you could have taken profit on 9 days out of those 3 weeks. If you'd bought at closer to 25% off the bottom you could have taken profit nearly any day in those 3 weeks.

Patience and discipline are key to making money. If you're not taking profit then you're not winning your trades.
Kommentar: The sell volume is still totally nuts right now considering the complete lack of sell order positioning but hopefully we can call the bottom soon at $7.9k.
Kommentar: If we go ahead and call the top to bottom decline $9200 to $7900 then that's about 14%. We can reasonably expect a retrace of 50% with 50% probability. That comes out to about $8550 and given that the 200 EMA is around $8900 and the 300 weighted MA about $8250 we should see a fair amount of price action between $8250 and $8900 as the 200 EMA appears to be a level of strong support/resistance. At a minimum I would expect price to get back to $8250 but with at least 50% probability of going to $8550 I think that's a reasonable "high" target for exiting a position taken between $7.9k and $8.1k.

Still a bit premature to project that so we'll see. Panic selling seems to have eased quite a bit but as usual, weekends have become one of the favored times to buy dips and/or panic sell at exactly the wrong price level.
Kommentar: I would suggest as a trading idea that you sell off a peak before the weekend, then wait for a dip over the weekend to buy back in.

A backtest of this simulation could prove it to be a terrible idea given an upward trending market, but maybe a great idea in a downward trending market.
Kommentar: If one had bought $100k in the last big dip in Bitcoin in March 2017 to around $800 (I think it hit $750) which we could say is roughly 20-33% below the recent ATH that was made in early 2017 and held through about $19k then that would have been a profit of over $2.275 M in 9 months.

Given that the expected dip off this ATH will be close to $5500-$6000 we shouldn't expect a quick retrace back to $20k. Considering that Bitcoin has moved from 80+% of the total crypto market cap to less than 40% we should expect a move back to the ATH to take significantly longer than 9 months unless institutional investing increases dramatically at the bottom of this current downtrend.

Many of these new "hedge funds" for crypto should be buying up hundreds of millions in Bitcoin as we reach the lower percentiles of where a reversal will be expected. Granted this might be too much volatility for these funds to endure but essentially hedge funds will be colluding to a degree by signaling that they will stay in the market to preserve the overall valuation.

Lately, the signaling has been negative as Novogratz called off his hedge fund.

I should also add that even though Tom Lee thought $9k was the bottom he apparently didn't look at the data showing the percentage of time Bitcoin spends below its ATH, which would have indicated a greater than 50% probability of a move to $5500-$6k. This shakes my faith a bit in Tom Lee's models, and the low on-chain transaction volume also worries me.

But this points to the diversificaiton of crypto that's happened in the last 10 months where nearly everything has blown up and hit $1 B+ market cap. This would suggest some real utility with coins like LTC, XMR, DASH (bleh), ETH, and genuine interest in up and coming ones like XLM, NEO, ADA and a few others I don't particularly like...
Kommentar: Above $7500 there's around $17 M in buy orders while below $8500 there's about $4 M. Normally this would imply a strong probability for price to increase towards $8500 but I think while the price is around $8k we'll continue to see a lot of weak hands exiting. Overall global BTC volume is way up and I would expect the Asian market to buy this dip fairly hard.
Kommentar: It's 6:18 AM Hong Kong time on Monday so if overall buy order positioning bumps from around $4 M to $5M above $8k in the next hour or so then I would take that as a good sign.
Kommentar: However, in about an hour the Super Bowl starts so hopefully that will lift selling pressure and allow the price to bump closer to $8.5k
Kommentar: I made a typo above that indicated ~$4 M in orders positioned above $8.5k. I mean tot say $7.8k.
Kommentar: I made a typo above. $8.5k was written as $8k and I meant $7.8k.
Kommentar: As I predicted we're seeing right around $5 M in buy orders above $7.8k now. So looking good.
Kommentar: It took nearly 3 hours to pass through this price level this morning so we could see some bouncing around this price level. This zone is kind of like the zone of people buying in that missed the dip and those taking profit off the dip so a fairly healthy amount of buy volume is a good sign.
Kommentar: Optimizing buy and sell targets based on optimizing risk:reward involves calculus so that's not where I could use someone with more math skills ...
Kommentar: I mean buy and sell order sizes.
Kommentar: Buy order volume above $7.8k is now solidly above $5 M and very nearly $6 M so we're definitely seeing positive momentum now.
Kommentar: Should see a decent bounce off $8.25k anytime now...
Kommentar: I'm hardly seeing any sell positioning to match this buy volume. Assuming a fair number of people tune out to watch the Super Bowl I don't expect any panicky price movements which should be favorable for an orderly move higher.
Kommentar: Definitely some kind of algo trading bots at work here...
Kommentar: We're basically going sideways now but not a whole lot of sell volume below $8.25k so should get back on track again... big buy volume at $8.2k
Kommentar: this crazy sell wall at $8320 looks like some kind of market manipulation
Kommentar: This big sell wall moved from $8320 to $$8135...
Kommentar: It's notable that whoever put up this big sell wall did not sell.
Kommentar: This sell wall definitely seems to be working well to manipulate other bots into selling. It bumped down $100 and clearly caused some a bunch of order repositioning to push the price lower.
Kommentar: I can definitely see the futures contracts tied to Gemini's closing price being problematic based on how little liquidity Gemini has. It would be fairly easy to manipulate the price by trading on only two or three exchanges and you would have very low risk.
Kommentar: Whoever is positioning this huge sell order clearly isn't interested in selling.
Kommentar: Not sure what happened with that sell wall but it seems to be gone. Sometimes you just have to walk away and watch the Patriots lose the Super Bowl.
Kommentar: LTC really holding its value against BTC and XMR.
Kommentar: I would definitely suggest looking out for this "killer" algo bot or whatever it was that put up the giant sell wall because it completely derailed the first rally. My theory is that some whale entered and exited for a big profit then put up a big sell wall to drive the price back down for a second run up.

Not really sure how to optimize for that...
Kommentar: That kind of market manipulation strategy takes a ton of risk off the table. It seems like more people/organizations would be trying to do that if it were so easy and it seemed like two big orders that were colluding on order position.
Kommentar: Tom Lee:


History of Price Manipulation in Bitcoin Markets

Kommentar: The market action has been noticeably bizarre today to the point that I'm looking more into various algo trading bots.

Here's a nice article from a few years ago.

Kommentar: I just can't believe I didn't notice how much price manipulation was going on with these trading bots. If a buy target doesn't get hit the bot throws a large sell order in to push back buy volume and reverse positive price momentum. This is really fucked up.
Kommentar: In a market with almost no sell positioning some bot keeps throwing up sell orders to push the price down to $7500. Given the way buy volume pushes back when detecting a large enough sell volume this bot basically sells repeatedly to small buy orders and the price creeps until it hits an actual, large buy order level like $7552 shows a battle between bots with a huge buy volume disappearing after a huge sell order appeared.
Kommentar: It seems like the only way to beat this particular bot is to throw up a huge buy wall like 50+ BTC... you definitely can't beat this bot without essentially doing the opposite, which is appearing suddenly as a real, large buyer, to scare off that sell volume before cancelling.
Kommentar: When the bot pulled off we saw a rapid gain of 2.2% and then when it came back prices quickly started falling again, pushing down bids and almost as quickly as that run started it's basically over...

Key here would be to anticipate the target margins (i.e. ~2%) and try to beat the bot in entering and exiting each time. Then you can benefit from the bot's manipulation while getting out before it starts to game the prices again.
Kommentar: The unfortunate aspect of these trading bots is that they are distorting the markets ability to determine price based on supply and demand, instead it's just a bunch of software trying to game other software with the winner being whoever has the largest fund. Effectively, if the market's price discovery mechanism is driven solely by bots that are trying to trick other bots into buying or selling then crypto becomes totally meaningless.

In some ways a centralized liquidity mechanism would help negate this bad behavior and allow prices to be driven more by actual human usage. If crypto prices are nothing more than bots buying and selling to each other in some meaningless stochastic dance and they essentially control the Bitcoin market, then that completely destroys the premise of a decentralized, censorship-resistant network because some deep pocketed organization or individual is using their leverage to influence prices, which effectively subjects everyone on the network to their control.
Kommentar: This bot definitely has "trading hours" as around 7:45 AM EST this bot appears to have stopped working and the market took off as would have been expected many hours ago based on order positioning.

This bot probably knows that when volume is at a certain level, the strategy that it uses will not be effective as it generally works best in the middle of the night when volume is low.
Kommentar: When this bot was working what was ridiculous was how sale orders would populate repeatedly while the rest of the order book was virtually empty and this repeated selling would trigger buy orders to shift to a lower price level as some kind of automatic response, leading to lower prices, and very little actual selling taking place.
Kommentar: This order bot is still at work. It only pushes a sell order if the current volume at the highest bid is less than 6 BTC and maybe if the price level is within some threshold to the target price. If the volume is over 6 BTC then it does nothing. This seems to generally work in pushing prices lower during low volume and poor liquidity periods. The key to making this order bot work for you is to try and find the target price level in which it is working towards or identify a target price level where it will fail to push the price lower and then observe whether the order book will stay at the target price level. If the volume shifts to a lower price then that suggests the price target is lower but you probably want to identify a level that is slightly higher to ensure entry.
Kommentar: I'm starting to see bigger sells but still the orders appear out of nowhere...
Kommentar: I get the feeling there is more than one of these bots at work now and they've got a lot more firepower to work with. I just saw a 50 BTC bid go from having no sellers to have 40+ BTC for sale out of nowhere... I mean, it makes no sense why the sell volume is just randomly picking up right there...
Kommentar: This coordinated push for 7500 should end soon. There is a huge amount of volume at 7500 and if that gets triggered we should see a big pump but I just don't know where they're going to get sellers from... There's almost no volume except for the weird trading bot volume that randomly appears out of nowhere.
Kommentar: I just saw a 400 BTC buy wall move into place and then the price dipped. Clearly there is something wrong with their order book or there is some serious price manipulation here.
Kommentar: I'm beginning to realize that unless you're trading with a $2 M+ fund (like $1 M and 140 BTC), a quant and several algo bots (aka cheating), you're just a scavenger, looking for scraps and your best strategy is to follow these sharks to identify entry and exits.
Kommentar: And then just camp out with an entry trade based on order positioning and give yourself a predefined percentage gain based exit that you know will beat the bots in their game.
Kommentar: Like this huge sell wall around $7200... Clearly just there to exert downward pressure. A key thing here is to set a price and stick with it. You can't outgame these bots and if you try you'll just end up missing your entry trying for a better price.
Kommentar: Definitely some concepts related to herd or pack behavior here. If you're the little guy you want to find the alphas that will keep you safe in the market.
Kommentar: based on a rough execution of this idea I made about 3.2% in the last hour. Should be better with time as my first buy order was placed while I was sleeping.
Kommentar: the danger with these bots is that they appear to exert constant downward pressure on the market and should organic buyers get exhausted from a lack of momentum the price will crash which doesn't matter for these bots because then their entry price gets even better.
Kommentar: Given the fairly balanced market and all of the sell pressure below $7300 I would just wait out this next move because there's no clear winner yet.

A safe bet would be to expect a retest of the previous low around $6.5k
Kommentar: Given that we're now well below the 300 day weighted MA and the 200 day EMA and the last time price was this far below those levels was Aug. through Oct. 2015 when price level dipped to $200 off a 300 day WMA of about $250 it seems like a fairly safe buy area.

If we consider that final dip was 20% off the 300 day WMA then it would be reasonable to think that buying at $6500-$6900 will be "safe" based on 2 year price action. However, I don't have data showing much prior to this time period, so the duration for price action to hang low could be relatively high and we could see moves back to $4k even simply based on that being about 80% draw down from the ATH.

However, anything below $8k should be reasonable risk reward over a 2-6 month timeframe though equity market volatility could be a consideration here as expectation of higher interest rates seems to have a mixed effect or even depressing effect on crypto prices as crypto isn't exactly a "safe haven" rather a speculative store of value that becomes enhanced during periods of low interest rates.

Even with a decent rally once this bottleneck clears at $7171 we're almost certainly revisiting the $6k-$6.5k levels again at least once before the next big bounce.
Kommentar: so that rally didn't happen as expected. whales appear to be positioned around $6.5k so somewhere in the $6.4 to $6.6k should be a solid entry level as the volume there appears to be massive.
Kommentar: So given this 1000+ BTC volume of orders positioned around the $6.5k level I expect the algo bots to dictate this next move down to a very clearly targeted price level. While it might be possible to get in lower it makes sense to take a position right before these "sharks" so you don't misjudge what should be a chaotic period.
Kommentar: A big cluster of 140+ BTC is forming around $6800 and it doesn't seem like there's enough sell pressure to counter this but most likely it will end up as a weak bounce to $7k and then back down again. A good example of going with a weaker pack and then getting killed because you strayed from the herd that gives you a higher probability of survival.
Kommentar: I have an idea for a paper that I would call "The Economic Problem of Bitcoin." And this would really apply for any coins where there is pre-mining and a pre-existing hierarchy of centralized influence. Essentially, in a game theoretical scenario there is a serious prisoner's dilemma problem where incentives exist for profit-seeking holders of cryptoassets to effectively destroy the very network / platform they use to profit. Clearly, this can be prevented with some mechanism but this could be more of a systemic problem to the idea of the permission-less blockchain itself.
Kommentar: Another idea would be that a slightly inflationary coin could actually win in a competitive scenario against a deflationary coin over a long enough duration if the game theoretical model of self-destruction is played out (versus an alternative scenario that solves the information asymmetry) as the owners of that coin will have a much healthier community of users that have less incentive to hoard (aka winner takes all) and more incentive to cooperate. I believe there is a paper describing this phenomenon. Gotta look it up... found some really good references in the paper below on price manipulation.
Kommentar: Eventually, if everyone manages to collude to move prices at certain times, the market will not be able to create any value and it will be more or less a rush to the exits, i.e. a Ponzi scheme.
Kommentar: Effectively, the sell or buy wall is basically like a moving train that you are either trying to jump out of the way of or jump on to.

Either way, it's a game of chicken that commits you to a prisoner's dilemma type outcome due to information asymmetry.

If you know the big sell train is coming then you can choose one of two options 1) get out of the way of that train by exiting in front of that sell price and avoid the likely outcome of price declining or 2) call the bluff which will likely result in your fatality since others are probabilistically likely to be jumping out of the way. So either way, you lose, simply because the train is bigger and unless you're more or less a wall of equal strength to stop that train then you have no choice but to comply.

This works in the opposite direction as well with a "buying" train. You can either get left behind or you can jump on the train early as it signals its arrival, further increasing the probability that you will "win". So again your choice is to either comply or put up a wall of equal strength to stop the train.

This plays out into who will then have the biggest train or wall? Eventually it will be come down to a 50+% type of attack and a knowledgeable player will be able to see that they will sabotage the entire game for everyone if they continue following these incentives. So for example the Winklevoss Twins and maybe Satoshi Nakomoto keeping their wallets more or less unspent could possibly prevent this outcome or at least create negative incentives for those who are trying to play into that outcome.
Kommentar: I haven't finished this paper, but the ideas here sound extremely interesting. They could be the basis for a serious hard fork of many coins to introduce collusion deterrence that would help the network avoid a prisoner's dilemma outcome over time. If this were a "winning" outcome then you should eventually see all coins adopting this as a competitive advantage and "losing" coins fail to adopt it flame out over time (i.e. many pre-mine, centralized, Proof of Stake type coins).
Kommentar: On another note it would also be interesting to study evolutionary game theory models that have been discussed in relation to parasitic or symbiotic animal relationships. Effectively there is a collusion there for either mutual or one-way benefit.
Kommentar: I could be wrong about how this algo bot works, but it makes sense intuitively. On the downside it seems that you could create a runaway train that becomes totally out of control and then whatever price action you were aiming for gets blown up by the market as you entrain more sellers or buyers depending on which way you're trying to go.
Kommentar: It's strange how on the buy side there was so much order volume lined up and now on the sell side there is mostly order positions very close to the market price. Clearly, indicating your sell position plays to a disadvantage whereas indicating a buy position signals where the support could be for a reversal (aka pump).
Kommentar: I'd like to think this bounce off $5900 was a sign of a reversal. Price moved 8.5% in 5 minutes.
Kommentar: At this price level the downside risk starts to diminish significantly versus that of $10k+ and given some strong momentum we could see a nice prolonged bounce. Hopefully with so many weak hands being cleared out we'll get to hodl for a longer duration profit target.

I made some mistakes trading the last few days by failing to identify the proper exit for a few trades and instead of making money I'm in a 1:1 risk/reward position... key takeaway is don't be greedy and be ready to exit quickly in a downward trending market if your target doesn't get hit.
Kommentar: GDAX is a full $125 below Bitfinex, the biggest spread in a while. I have no idea why so much volume is exiting the market between $6080 and $6130. It must be around 340 BTC. One would think this volume has something to do with exerting downward pressure on prices because we've cruised through this range three times now and one would expect that a profit oriented strategy would set a higher exit target.
Any cluster of volume over 100 BTC seems fairly safe as a target. Any cluster over 200 BTC (out of an overall larger order cluster of 1000+) and it might be hit or miss but very close to the optimal entry.
powderpc powderpc
@powderpc, these numbers are for GDAX and assume somewhat low volume. On big volume clusters you will see 1000+ BTC worth of orders in position.
This paper points out why trading the less liquid crypto pairs can be very dangerous due to the ease in manipulating prices.


"The market cap of other cryptocurrencies surged by even
more. In the one year period ending in mid-May 2017, the market value of cryptocurrencies
excluding bitcoin surged from 1.7 Billion USD to more than 29 Billion USD . That is an
increase of more than 1,900 percent. Similar to the bitcoin market in 2013 (the period we
examine), markets for these other crytocurrencies are very thin. Our analysis suggests that
manipulation is quite feasible in such settings."
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