Topic: Educational: Breaking misconceptions about market crashs (Read 327 times)

If this idea will be absorbed by the crypto community, i guess the whole bitcoin society will probably resort into doing wrong decisions that could lead them into visible losses in their investments. Bitcoin continue to show price decline because its the effect brought by bear market plus the negative economic condition of most of the countries. And bitcoin price is definitely affected by all of that, but a simple failure of an altcoin or any shitcoin could never be a sole reason why bitcoin price drops suddenly.

If bitcoin has an issue and its price drops, expect that all coins will be affected too. But when it comes to altcoins, even if they end up losing their value, that won't create huge effect on bitcoin. Although bitcoin is still prone to such price decline, but always know that bitcoin will eventually recover and target to reach new all time high after that. Maybe the recent price drop for bitcoin is actually more on the reasonable effects due to global economic condition, and crypto market is not the only one affected but as well as with the other market.

Well, it is a very weak correlation at best.
If you look at the past couple of years, specifically from the time COVID19 pandemic began. All countries in EU and elsewhere have been printing a lot of money non-stop. Not to mention the damage to the economy as a whole. That inflation had to show its head somewhere.
On top of that countries are dumping US dollar which would weaken it hence the increased inflation in US and the stock market crash.

So far all the economic crisis I mentioned had nothing to do with the war since most of it happened before the war even began.

Then the war happens and the speed of economic crisis increases so EU inflation hits harder, electricity price goes up faster, food prices go up faster, US inflation starts setting new ATH every month, US stock market starts dumping harder than before, ...

So far none of it had anything to do with bitcoin simply because bitcoin is THE hedge against inflation but then people see the US stock market crashing and for some unknown reason they are convinced that they should sell their bitcoins because of that. So they start selling bitcoin and bitcoin crashes!!!

Shitcoins are a well-known substitute for people who are always searching for quick profits, they are purchased at low prices in anticipation of a short-term price pump or increase. When this occurs, the majority of them typically collapse or drop, and it takes the strength of the project's product to see the ATH price again, the hype also plays a role in making it to the previous high sometimes. When this crash happens, they do directly or indirectly affect bitcoin especially when there are millions and billions involved, this reminds me of LUNA.

Altcoins are not the only element that contributes to bear market periods, although they do most of the time. Traditional markets such as the SP500 and NASDAQ also have an impact on the movement of Bitcoin, not to mention inflation and recession.

I'm a little confused, but if you say there is no connection between the war and the price of Bitcoin it seems to exist even if it is small. I think there has always been a correlation of the state of the world to Bitcoin, in particular the world economy. I think the war also caused the economy in Europe to be slightly disrupted because Russia is the world's No. 2 oil supplier. They stopped supplies to some of Ukraine's allied countries and of course it made the state of the economy unstable. This will affect investors' interest so they prefer non-risk assets. Naturally this will make a market opinion like what you say.

I feel that is done because people want to sell their news, the pressmen sometimes want to sound like investigators and make it feel like they can connect every crash to a particular thing, whether correct or not, the headline: Elon musk causes bitcoin crash is very catchy for them, and business goes on.

That is the reason i feel peole remember those cases more, bacause that is what is prepared for them to read, they also go on to spread it to their acquaintances and on it goes. I feel the most important thing for a bitcoin user is to have knowledge, inaccurate information is easy to spread in the bitcoin market or network, and what follows is panic, but the users that are informed will with ease separate the wheat from the chaff, and do what is right.

The worst part is that people tend to forget cases that don't affect bitcoin and only remember those that do even if they have a tiny effect. For example when bitcoin price was falling some time ago and then Elon started his FUD campaign everyone thought he caused the crash! Then he tried his FUD campaign a couple of more times and it had no effects on the price whatsoever like the most recent one.
But people only remember that first case not the rest!!!

I disagree because the Ukraine war does not affect bitcoin at all. Not even a little bit simply because there is no link between bitcoin and that war.

The effects of this war is on other markets, more specifically the US and EU economy. So when for example the US stock market crashed hard many bitcoiners panicked and started selling their bitcoins irrationally hence causing the bitcoin crash.
That crash has not stopped, for example EU economy is still shrinking whereas bitcoin price stopped dropping and in fact it recovered a little bit. So the only thing that is priced in is the panic sell.

Of course fear acts as the fuel to drive most of the crashes but the fact is it can't be completely resisted when they see the drop all they want to do is to save their portfolio value and also many use this as an opportunity to buy cheaper price than current ones. And its normal in all the markets but when the whales loses their manipulation power which will eventually happen over time what we can expect is to get the volatility range to be lesser not really completely stable to call it as storage of value.

I'm not sure if it can considered a FUD campaign. And when more people would know about Bitcoin being technically independant from Altcoins, it would not have caused a significant drop.

I talked about more DeFi products collapsing.

Yes, and AFTER it I've said:


Please, don't take my post out of context, Sir!



When Bitcoin crashed, many economic decisions were already priced in.
Corona is priced in long ago, when it was first detected in China and markets collapsed, setting Bitcoin for a short time at under 4k again 2 years ago.
It is now priced in, same a money printer goes brrr.
Putin's war is priced in already and it was a huge market shock how Putin started his war against Ukraine in February. It was a huge war crime when RuZZian military bombed Ukrainian civilians countless times and Putin tries to use his monopoly on gas to surpress states depending on his gas. Putin has caused a huge crisis but it is priced in.
Putin is also trying to facilitate a world hunger crisis where he is trying to starve Africa by bombing Ukraine's wheat exports. Putin is a real war criminal.
It is horrible, what Putin is doing against Ukraine but it is priced in.

Panic sell for economic reason was much earlier. It was recently, because people got fear about Altcoin crashes.
And it was irrational fear about Altcoin crashes.
It does not affect Bitcoin's fundamentals.



Yes, people need to stop selling Bitcoin. People selling at such low prices will make a LOSS.

People only see bitcoin falling and beleive in the reasons they see over the net like the LUNA crash ans 3AC insolvency news but didn't know how it directly affects the prices because they have bitcoins as reserve asset and sell off them in the market to pay off the debts but as you said shitcoins fall don't impact the bitcoin downfall an even after such hits the prices recovered.

It was at the time when we saw the range shifting from $20k below and struggling to rise and see the Tesla news of selling bitcoins didn't have a much impact on the prices going down so bitcoin is independent of these shitcoins load but if some major party or company holding bitcoin got it's position liquidated it could affect the prices adversely but in long run it tends to rise only.

I disagree with your speculation. Altcoins have always created sell pressures on bitcoin but never too high to cause any crash of any size. In the most recent case we saw this too, there was a small panic sell but nowhere near $10k drop.

You are missing all the other things that have been going on, the fact that the world economy is in a pretty bad shape these days and many other markets have been crashing too.
You got the irrational part right though but the reason for panic sell was the economy crashing not some shitcoin being dumped.

Bitcoin didn't crash because an altcoin failed. But the foundation that stood behind that altcoin (Luna Foundation Guard) sold off billion dollars worth of Bitcoin. That's the connection. The sell-off. The owner of those coins isn't important and it could have been someone else. But this time, it was the team behind Luna who sold 80.000 BTC. That of course triggered other holders to sell and we know the rest. Bad news coupled with panic and FUD and here we are.

It happened in May and you can already see a number of post-mortem analysis on the LUNA and UST crash online. This is probably the most detailed with all the dates and links - The Fall of Terra: A Timeline of the Meteoric Rise and Crash of UST and LUNA.

For the said 'attack', there are still speculations on how it exactly happened.

For the disposal of BTC80K, you can also find it on LFG's series of tweets
LFG BTC Address: bc1q9d4ywgfnd8h43da5tpcxcn6ajv590cg6d3tg6axemvljvt2k76zs50tv4q

You know, someone should make a timeline on how exactly Luna UST collapsed (even I am not quite sure what happened, as I have never heard of this token), and then post it somewhere here. So that the wild rumor-mill stops churning and everyone learns a lesson from this.

The sale of BTC80K alone may not have been enough to crash the market but why don't you think of the whale bears that also sold a lot which helped broke vital support?

Yes but it most likely happened after the two conditions I said above.

Are you talking about Celsius? It's a lending platform that also holds a massive amount of BTC (over 150K) as of April 2022. What happened to them is not really an altcoin news, they just happen to have their own token.

Remember that you also said this:


Nobody is contesting that we should look at bitcoin and altcoin separately but anyone, probably other than you, would also take that statement the same as @hatshepsut93 that altcoin was the reason for BTC crash. Also, no one is against your statement that the market crashed because of fear/misconceptions and that it's irrational but the argument is you connecting it to altcoins.

Did you even try to read or understand my post?
I said in my post it is essential to know Bitcoin is NOT related to Shitcoins.
Because Bitcoin is COMPLETELY different from Shitcoins.
Bitcoin is NOT tied to Shitcoins and people need to understand.
People need to understand it and don't sell when a random Altcoin has issues.
But some ppl even have no basic understanding about Coins and don't know basic rules. Bitcoin is on a different, own Blockchain!!!
An Altcoin has no link to Bitcoin's tech.
Bitcoin and Altcoins are totally independent, still people are getting FUD and sell Bitcoin causing a crash because such people HAVE NOT DONE RESEARCH.
People need to start doing research.


Stop lying!
If you don't want to read or understand my post, no need for you to reply here!
I say we need to look at Bitcoin and Altcoin separately because it is different tech!!!!

This idea that shitcoins are responsible for Bitcoin crashes is doing more harm than good. It just ruins the credibility of Bitcoin as a currency and a reserve asset. Imagine if USD was crashing because Zimbabwe or Venezuela printed more of their useless fiat currency. But this is essentially what you are saying about Bitcoin. That scams can bring down its price. How it is supposed to replace fiat then?

what surprised me most id that even at this moment, some bitcoiners also have this fear of uncertainties about bitcoin as a result of the bear in market price, what then should we expect from the world of cryptocurrencies in general when those in the right right system (bitcoin) network fear what should the altcoins and other investment means create in people's mind.


what needed to be clear here is that the bitcoin market price does not need this to create it market value or price, it works strictly base on demand and supply strategy.

To a great extent I think this forum has been doing that. There's been enough sensitization against panic selling and I want to believe that the message is being absorbed by noob investors who care to read and adhere to that. Any watcher of Bitcoin from the past two halvings should know that what's playing out now had happened before and Bitcoin came out victorious. The market will continue to bull and bear because that's its nature.

What happened there was the ripple effect of panic sellers. Panic sellers tend not to be rational whenever their emotions are punctured by FUD. They go on selling spree and don't care if their action is in any way related to the reality on ground.

It's only about Luna crash.
Yes, Luna sold all Bitcoin but please look at how much is Bitcoin's volume daily
Why is it so hard to admit Bitcoin's crash was unreasonable based on fear and misconcettions.

Exactly, it was based on fear and misconception.
It has been a very unreasonable crash.


+1

Lets agree to disagree. Its only not about Luna crash here mate. Yes they did sold all of their bitcoin to retain its peg on their stablecoin but seems not to work and eventually lead to a bigger crash. Yes I agreed it was fear but if you look into the technical side. Its destined to be like that since were oversold already and has to make some correction that is hugely been criticize as manipulations. Anyway you got your point its just not a solid one that believable though.

This problem seems to have become a tradition, for several years knowing the price and movement of BTC and altcoins. Altcoins and BTC have always had an entanglement. They have a relationship, this consensus has been trusted. Realistically it's actually quite realistic because we can see the dominant amount of BTC. If Dominance goes up then altcoin habits tend to go down because many hold BTC and vice versa. CMIIW


Yes, but I don't think there's a big effect. Either this just makes the market opinion worse to make the BTC price lower or it is the reality. In other news, Finland is also selling confiscated BTC to help Ukraine but i see no big effect.

Source: https://www.bloomberg.com/news/articles/2022-07-21/finland-liquidates-seized-bitcoin-stash-amid-crypto-bust

Not sure if I would call it "stable" if they gave bitcoin a great amount of sell pressure. Obviously it would look "stable", because they slowly sold the bitcoin rather than doing it all in one huge sell offer(which would be horrendous for both Tesla and the broader crypto market).

Do you think Bitcoin fell because of altcoins?

Altcoins are not reasons why Bitcoin fell down. It will fall with a reason to you see. Luna Foundation Guard sold their Bitcoin but do you think why they had to sell their Bitcoin from their guard?

Market makers test the market and when they saw a great opportunity to pull a trigger, they did it. Luna is a victim in the game to break a price of Bitcoin.

The point is that an altcoin having fundamental issues is not going to affect Bitcoin much, the sell off could have caused panic as it's somewhat Bitcoin related and can cause panic and fud. There are also other factors that goes into price movements besides what hits the news as headlines.

Relatively stable. Depending on how you look at it. Compared to what happened with the Terra situation, this didn't lead to such a crash. But if I remember correctly, bitcoin was trading at around $24k when it happened, and then the value dropped to $21-22k. Nothing dramatic but we are still looking at a difference of 8%.

But it is not enough to crash Bitcoin almost about 10k down.

It was a crash caused by fear and irrational decisions (panic sell). Many people lost money as Bitcoin slowly recovered later but people stayed weak (which was a mistake) and more Altcoin bad news arrived. Totally irrational.

Yes, but markets stayed stable.

As Bttzed03 mentioned, the Luna Foundation Guard owned over $3 billion worth of Bitcoin and several altcoins. But when Terra started crashing, they made the decision to sell almost all of their bitcoin collateral trying to stop the stablecoin from de-pegging further. That didn't work out and Terra is now art of crypto history.

Didn't Tesla also announce recently they sold almost $1 billion worth of bitcoin?

It's not as simple as altcoin related.

If I'm going to guess, it's more like this:
Luna Foundation Guard (LFG) sold a significant amount of bitcoins (80K) after the 'attack' to save the dying UST, more bears took advantage of the situation to push the price down further, and then the majority of retail traders sold out of panic.

If you're going to say the market crashed because of what LFG did, you might as well say they also helped pumped the price when they bought BTC for their reserve.

Most crashes are not rational and instead, driven by misconceptions and fear.
We need to break such misconceptions to build a stronger and more resistant market.

Recently, Altcoin pressure has resulted in Bitcoin losing value. A huge crash occured, where Bitcoin lost 10k USD.
It was clearly not a rational decision.
Selling people lost much money.
And here's what's important:

 
It was because a Shitcoin collapsed (Terra Luna).
And one more Shitcoin, too (Celsius)
NOT because Bitcoin had issues!

It was only Altcoin related but Bitcoin declined in price, too.
Completely unreasonable because Bitcoin had NO issues.
It was only Altcoin related.

People need to learn to differenciate between Bitcoin and Altcoins.



 
Bitcoin wasn't responsible for what happened, Bitcoin was safe, working as usual and as usually proven since Bitcoin was started. It was caused by a single, very risky ALTCOIN, where fundamentals of were not proven sufficiently. It was a weak Altcoin causing a huge crash.
An Altcoin, where no link to Bitcoin's tech was around. Bitcoin and Altcoins are totally independent, still people are getting FUD and sell Bitcoin causing a crash.

People should be aware for a similar situation: Bitcoin wasn't responsible for what happened, Bitcoin was safe, working as usual and as usually proven since Bitcoin was started. No need to sell Bitcoin.
People need to learn to be wise and don't sell Bitcoin when different Altcoins are having techical problems. It will likely happen a lot more because we have a lot of shady Altcoins!

A very good recommendation: don't sell Bitcoin when a different Altcoin crashes!

After all, such crashes will only re- distribute coins from weak hands to strong hands (HODLers).


Bitcoin is a store of value, HODL

To be succesful means to understand Bitcoin is independent from Altcoins and to understand HODL.  
To be succesful means to understand Bitcoin is a good store of value.

Bitcoin is valuable because BTC is capped at 21M coins, Bitcoin's supply can't get inflated.
Imagine in 100 years, FIAT inflation is 2 to 10 percent every year, but Bitcoin is capped.

Bitcoin can get a real alternative for gold, digital gold and a very reliable store of value. But people need to do research about Bitcoin,  halving mechanism and technical independence from Altcoins.
Don't be feared.