It's all just speculation based on available data. I remember 2019 when the IEO became the trend and the Golden Cross indicator caused Bitcoin to hit $ 14000 and this year's ATH was $ 12000.
Especially this year, the block reward continues to decrease by 50%, so maybe by the end of the year, the market will go faster, soon have strong growth to have a new ATH instead of waiting until 2021.
Topic: Why did we experience an overshoot in the price of Bitcoins ? (Read 309 times)
September 11, 2020, 08:05:00 AM
Hello to all. Overpricing or underpricing contributes to price dynamics - this is the driving force of any market. There are many reasons for the increase in the price of bitcoin, and if the price is at a high value, it means it is profitable for market makers, plus the dollar crisis before the presidential elections in the United States makes a significant impact on this process.
Hello , I found an article and it did seem very interesting, the author tries to explain why Bitcoins broke the resistance and we saw an amazing rally.
https://www.coindesk.com/how-real-is-bitcoins-rally-8-interpretations-of-bitcoins-massive-surge
https://www.coindesk.com/how-real-is-bitcoins-rally-8-interpretations-of-bitcoins-massive-surge
Quote
Buyers exceeding sellers
This for sure is the main reason why BTC overshoot in price, others are just assumption.
According to the author the following reasons did mark a uptrend but there are few reasons I would like to add.
- People Investing their stimulus bills
- No jobs !!
- People Investing their stimulus bills
- No jobs !!
Can you explain how this two help to overshoot BTC price? Pardon me but I don't see the connection of these two to the current price increase of BTC.
Please do share what to you guys think ? ?
Majority of the given reason are just assumption, unless if supported by details and statistics.
Afterwards everybody is smarter and it´s easy to point out random events to be a reason for a price movement. If you think about the decades of data we have for stock or forex trading, the little time we have for Bitcoin data makes Technical Analyses more something like Technical ANALyses. The impact of outside intereference is simply to big to get ignored and as it could be seen on the Halving, fundamental news might not trigger anything as well, which in summary makes the whole movement of a price pretty erratic and unpredicatable. We are still in the Wild Wild West of crypto and until there is a mass adoption and a clear global framework we will always see price movements in this or the over direction.
It is true that we cannot accurately predict the specific events that caused the rally but one thing is that the financial institutions are playing a major role whenever the market goes high and i am expecting the same in this situation, i am yet to fully understand when and why they invest at certain period and whenever we expect a small correction the market is recovering strongly.
They are playing a role, sure. But to what extent? We have absolutely no idea if the institutional investors did a move significant enough that it actually caused the price rise. We don't even know if they're bullish in the first place, what if they were shorting it? Again, all boils down to we have no freakin idea.
" More Buyers than Sellers" This cracks me up that they threw this in there as a reason. Like, ya don't say. What do you mean by "No jobs"? That seems to me like it would be a reason people would be selling not buying. Also that's not accurate that you can't make money in the stock market short term. You can day trade making money today, stocks could continue to rise for several more years etc.
More years it needs for the stock market to fully recover. Some countries had resume their Businesses but it never shows an inclining market sales but rather to see at a low level. That is to aggree with you that more people are selling but not buying at all. @ OP,
With uptrend market sentiment for crypto, it wasn't because people are accumulating it now for future purposes or to make a trade but it is because they want to use this for payment. They only just converting their FIAT money to Bitcoin and soon once the crisis is over, they will convert it back to fiat again. "NO JOB, NO MONEY" It never fuel the market to surge HIGH but rather to keep at low.
I have to admit all the things you mentioned in the opening post did have an influence on the increasing demand for Bitcoin.
That makes overshoot in the price of Bitcoin, and of course this is good news for us as a cryptocurrency community. I see
loosing trust in Dollar as the strongest reason that makes the Bitcoin price go up.
That makes overshoot in the price of Bitcoin, and of course this is good news for us as a cryptocurrency community. I see
loosing trust in Dollar as the strongest reason that makes the Bitcoin price go up.
Sure most likely some of those events(or a combination of some of them) caused the price rise, but whatever. In the end, there's really not much we can do to accurately know what specific event caused it. All we know is that the demand increased, hence the price rise. Let's leave it at that.
It is true that we cannot accurately predict the specific events that caused the rally but one thing is that the financial institutions are playing a major role whenever the market goes high and i am expecting the same in this situation, i am yet to fully understand when and why they invest at certain period and whenever we expect a small correction the market is recovering strongly. " More Buyers than Sellers" This cracks me up that they threw this in there as a reason. Like, ya don't say. What do you mean by "No jobs"? That seems to me like it would be a reason people would be selling not buying. Also that's not accurate that you can't make money in the stock market short term. You can day trade making money today, stocks could continue to rise for several more years etc.
Not having a job puts you in a place of uncertainty where you're seeking financial refuge. Bitcoin is considered a great refuge by many (including me) from the failing financial system, so a lot of people may buy during rough times (the recent correlation between gold and BTC price pushes makes it even more obvious now). But this is just one reason out of possibly hundreds. There are too many to have a list of price influencing factors you can solely rely on.Halving & halving FOMO, the USD inflation in the past few months, the virus situation, the rise of Gold, Bitcoin slowly becoming more mature as time goes on, adoption level, crypto legal status in certain countries .. etc. Whoever has the answer to all of these and the many others missing has a broad idea of what the market should look like.
- People Investing their stimulus bills
- No jobs !!
- Stock market might be good for the long term , but right now I don't think people can really invest there for short term
- Gold prices is incredibly high
- Good representation of Bitcoins and many countries giving it the legal good to go status
- Bitcoins have outperformed Gold and S and P 500 index
- People in for HODL
- People loosing trust in the dollar which should definitely happen since they printed more money than ever and that a whole bubble that we are seeing right now waiting to take the market down ((+ am not comfortable with trading in US dollar personally too till the time America Gives Racial Freedom to all its citizens and stop treating people like Animals, I would rather risk the volatility ~))
- No jobs !!
- Stock market might be good for the long term , but right now I don't think people can really invest there for short term
- Gold prices is incredibly high
- Good representation of Bitcoins and many countries giving it the legal good to go status
- Bitcoins have outperformed Gold and S and P 500 index
- People in for HODL
- People loosing trust in the dollar which should definitely happen since they printed more money than ever and that a whole bubble that we are seeing right now waiting to take the market down ((+ am not comfortable with trading in US dollar personally too till the time America Gives Racial Freedom to all its citizens and stop treating people like Animals, I would rather risk the volatility ~))
- Barely anyone does that, people spend those money to cover their basic needs
- No jobs - no money to buy Bitcoin with. And people generally wouldn't gamble their last money on a speculative investment
- Stock market is booming right now, it's actually on its ATH
- So? Bitcoin isn't correlated to gold
- Maybe it contributed a bit, but not enough to cause a rally. It's not like Bitcoin is not a legal tender or anything
- So what, it's the nature of a risky investment to outperform big stocks when it's bullish
- We don't know how much trust in the US dollar people are really losing, but there aren't any signs of a real mass panic right now
" More Buyers than Sellers" This cracks me up that they threw this in there as a reason. Like, ya don't say. What do you mean by "No jobs"? That seems to me like it would be a reason people would be selling not buying. Also that's not accurate that you can't make money in the stock market short term. You can day trade making money today, stocks could continue to rise for several more years etc.
Mainly because of the speculation for the mass, as we are all bored in our own houses we think of our things quite a bit strange, like monitoring the price each and every minute just in case a huge pump happens. And just days go it did, but it is noticeable for most though, and guess what there are people who have rid the tide of the pump from $9k range to $11K and now it is resisting a new support. If we base on the recent news, there are steps being made by some major companies towards the crypto, worth mentioning the VISA filing their own crypto system patent for linking fiat-crypto transaction. If I were a person who is doubting crypto, this might be the mind changer for me.
it is the goold old FOMO that we have been expecting to happen for a couple of weeks. each time bitcoin tested the $10k resistance and didn't break it and filled the pockets of the accumulators as the panic sellers panic sold, the upcoming FOMO became stronger.
and without any surprise as the $10k was broken a surge of buyers rushed to exchanges and started a panic buying hence the jump to that high level in a very short time. in fact i was even expecting to see $13k+ as i mentioned it multiple times before but still $12.2k is still close.
and without any surprise as the $10k was broken a surge of buyers rushed to exchanges and started a panic buying hence the jump to that high level in a very short time. in fact i was even expecting to see $13k+ as i mentioned it multiple times before but still $12.2k is still close.
That has been happening for so long and it didn't have an effect on the price. If you recall there are many topics regarding predicting the fall of the price during the first phase of the covid19 pandemic but the price did not fell but was steady for a while. The point is that when the price goes up or down, people attribute it to many factors that have been evolving but were not having an effect on the price. My submission is that there is a direct influence by the whales to pump the price and not because of any factors stated above
Though I'm not saying what OP said is what caused the price rise, how do you know that it isn't? Just because there wasn't an immediate effect hence it can't be the reason ever? Sure, it could be "tHe wHaLeS", but in the end it always boils down to NO ONE KNOWS hence why I'm heavily pushing the typical supply and demand narrative.
Having US as a benchmark for cryptocurrency related matters is a gross stupidity!
It’s a lot easier to write that something is "gross stupidity", rather than realistically looking at the facts for which something needs to be taken into account. Like it or not, the fact is that most of the world revolves around what's going on in the US - and although I don't like it, I accept that it's a reality. If their banks have received a license for custody crypto services, this is without a doubt very positive news for them and for all global investors, after the same thing happened in Germany at the beginning of the year.
If you live in the belief that something important is happening in the world today without the influence of the US, then the US-China trade war is just a fabrication of the media, the sanctions for which hundreds of millions of people suffer are also not true.
If, by any chance, Bitcoin in the USA experienced a fate like in China, I would ask you what would happen then - progress or something else?
Smart investors are simply fleeing to BTC, let's just say that. The US and the world economy is falling, and investors are looking for the best option right now which is: bitcoin. And then more investors follow suit, pushing to a level that we are not supposed to be at this juncture of the bull run. You just have to think about it, would you rather have your money in banks, stocks, gold (precious metals) or cryptocurrency such as bitcoin and ethereum?
At this point of time, I wished i could have stocks, gold and bitcoin. This is what do we called diversified investment. As It is true that cryptocurrency is at its frenzy, eveyone is buying. However, for long term perspective economy will survived together with your investments to known stocks or gold.
As to the current scenario of bitcoin, I totally agree on most of your marked stimulus about current bitcoin rally aside from 3 and 5. Bitcoin is also not so cheap either, it is way far expensive than Gold price per share. And as to the prospect of bitcoin outperforming gold and S&P index, it doesn't matter at all. S&P and bitcoin had correlated for clearly a year based on a report made by coindesk; thus, it provides an impression that market will not aligned on people's manifestation rather to the institutions as they play the market.
People buying bitcoin because of our current economic problem may become fuel for bitcoin's next parabolic move.
Market influences or fluctuations in cryptocurrency can be caused by anything but I prefer economic problems for now, since the US has had problems with their economic development. Somehow cryptocurrency is more alive now because the world economy is in trouble caused by co-19. Based on my assumption, that all of what is said has a bearing on the crypto market, so I think that's all the reason for what caused this to happen. we can only assume and will not know the real cause.
Most of the time, these guys are connecting the dots of various things, trying to stir up a story that does not even exist, but then cause a change of sentiment on the market. I don't trust these guys but if I'm doing some trading, I'd read the title to predict the sentiment of the market.
Most of the time it was a pain in the ass, which is why holding undervalued asset is way easier for me.
Most of the time it was a pain in the ass, which is why holding undervalued asset is way easier for me.
Sure most likely some of those events(or a combination of some of them) caused the price rise, but whatever. In the end, there's really not much we can do to accurately know what specific event caused it. All we know is that the demand increased, hence the price rise. Let's leave it at that.
That has been happening for so long and it didn't have an effect on the price. If you recall there are many topics regarding predicting the fall of the price during the first phase of the covid19 pandemic but the price did not fell but was steady for a while. The point is that when the price goes up or down, people attribute it to many factors that have been evolving but were not having an effect on the price. My submission is that there is a direct influence by the whales to pump the price and not because of any factors stated above
Does bitcoin and gold related to each other?
I do not think they are proportionally correlated because bitcoin is not even backed up by gold.
I've took a liitle time to search, based from Cointelegraph:
I do not think they are proportionally correlated because bitcoin is not even backed up by gold.
I've took a liitle time to search, based from Cointelegraph:
Quote
When computing the correlations for the entire sample (from April 2013 until December 2019), between gold and Bitcoin prices, the data showed that they are considerably correlated at 46.5%, with 0% being not correlated, 100% meaning it’s fully positively correlated and -100% meaning it’s fully inversely correlated.
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