Bitcoin Forum

Yesterday’s price action doesn’t surprise me at all.

1.   Sunday was the Good Wife episode that a lot of hot money was trying to chase.
2.   Basically this move went from $2 to $7.20.  It is quite common for 40-60% of the move to get retraced in a bull market. Guess what? The decline ended right at the 50% midpoint.
3.   I consider this to be quite constructive.  Parabolic moves don’t last (see last June).  Retracements such as yesterday’s tend to wash out the week hands and allow savvier more patient traders to load up at the hot-money speculators expense. Events like yesterday actually make it more likely for the up-move to persist.  People with strong hands dominate the market and the strong hands got paid yesterday.
4.   Also note that around the time of the show, BTC couldn’t really stay above $7.22 a high that was printed a few days earlier.  This also suggests that the market was “tired” or perhaps overloaded with latecomers and needed to get the dead wood cleaned out.
5.   IMO, the bulletin board and around-the-clock nature of bitcoin leaves it sort of vulnerable to quick (usually down) moves.  People don’t expect them to drop so far and a large offer can sweep out all the bids and cause the price to overshoot downwards.  It takes a while for the news of the price drop to get conveyed and after a while you would hope that new bids enter to capitalize on the overreaction – which is exactly what happened.