When I woke up this morning and took a look at the cryptos going down and then the news taking like they know about the cryptos phenomena. The problems with the current financial analysts is that they have almost no experience or understanding of the cryptos. Like this professor here.

https://www.cryptocoinsnews.com/economics-professor-the-last-stage-of-the-bitcoin-bubble-is-yet-to-be-reached/

And then some making crispy headlines like here calling it a monday massacre which in terms is for the time being a massacre of many starters.

https://www.cryptocoinsnews.com/monday-massacre-bitcoin-ethereum-lead-way-cryptocurrencies-retreat-red/

This article is to make investors understand how cryptos work and why their prices fall down so steep.

I will try make make it as simple to understand as possible.

Let's say I have a great idea like the idea of IOTA explained very nicely here
https://www.cryptocoinsnews.com/iota-falls-hard-topping-nearly-crypto-losses/

and

https://storj.io

Now I need money to implement my great idea. The good thing about cryptos is that you can crowdfund yourself which is not very easy without the cryptos . Now I create tokens based on BitCoin or Ethereum contracts and put up on exchanges for sale. Investors come in and buy this token which provides me with the money to start an office hire some people and making my idea reality. The factors here are that I have to pay

1. Employees
2. Rent for the office
3. Electricity/Utility bills
4. Buy hardware for my employees to work on
5. Marketing expenses
6. Eat and drink to stay alive

And all of these things are not yet possible with any of the current cryptos even the Father of all Alts Bitcoin.


In order to meet with my expenses I will cash the pre-mined tokens or coins I had mentioned before launch that are kept for development and this is where the so called MASSACRE starts. Let's say I need 1 million dollars in cash to start my work. I will sell my development coins/tokens and the people who do not realize this whole scene will count it as a Pump/Dump and start dumping whatever they have at whatever price they can get and this becomes their own massacre just because of fear and lack of knowledge of the whole process.

Next thing happens is that most of the people mining are selling their hashing power through services like nicehash so when the price on exchange goes down the people buying the hashing power from nicehash take down their order prices in order to keep their profits in sync which the current coin price. So then they start selling coins for low pricing and then this ripple effect keeps on going until the people with low patience have lost all they had. During these times people with patience will buy or will not sell what they have under the price + profit and will wait until this ripple is over and things bounce back.

And then there are bots trading. These bots analyze the situation and as per perdiction place sell orders when the price starts going below their buying price + minimum profit. so the people using intelligent bots keep themselves safe by specifying maximum margin to sell and minimum margin to sell. To understand this lets say I had set my bot to use 10 candles to analyze the trend and buy or sell If these 10 candles indicate fall and I had bought 100 eth @ 0.1 BTC and set the bot to buy @ current price - 5% and sell @ buying price + 1% if trend is going down otherwise keep going high and sell @ buying price + 5% profit. Then these bots will cause the panic and cause the real people to suffer.

Why Ethereum is falling so Hard?
Most of the new tokens issues and put for sale were based on ethereum and so when the process explained above starts the currency with most of the tokens based on will get hit most. But the good thing is that it will bounce back again even at more speed since most tokens are based on it.

Also this time

cnbc dot com/2017/06/22/ethereum-price-crash-10-cents-gdax-exchange-after-multimillion-dollar-trade.html

Summary from the link:
The price of ethereum crashed as low as 10 cents from around $319 in about a second on the GDAX cryptocurrency exchange on Wednesday, a move that is being blamed on a "multimillion dollar market sell" order.

Ethereum is an alternative digital currency to bitcoin and had been trading as high as $352 on Wednesday. It has since rebounded from its flash-crash lows to trade to about $325 on the GDAX exchange. According to industry and price tracking website Coinmarketcap, which takes into account the price on several exchanges, ethereum was trading around $338.

Adam White, the vice president of GDAX which is run by U.S. firm Coinbase, posted on the exchange's blog, outlining what took place at around 12:30 p.m. PT on Wednesday. According to White, the multimillion dollar market sell order resulted in a number of orders being filled from $317.81 to $224.48.

As the price continued to fall, another 800 stop loss orders and margin funding liquidations caused ethereum to trade as low as 10 cents.

A stop loss order is a trade that is executed automatically once a security — in this case ethereum — hits a particular price. Margin funding is essentially trading with borrowed funds. Liquidation is when these positions are closed automatically in order to prevent further losses. The knock-on selling effect caused the flash crash on GDAX.

Many on social media criticized GDAX and alleged there was some sort of illegal activity taking place. GDAX denied this.

"Our initial investigations show no indication of wrongdoing or account takeovers. We understand this event can be frustrating for our customers. Our matching engine operated as intended throughout this event and trading with advanced features like margin always carries inherent risk," White said in a blog post.

"We are continuing to conduct a thorough investigation and will keep customers updated with any resulting actions."

White also noted that these trades are final and will not be reversed. The exchange temporarily halted trading of ethereum on Wednesday before restoring the system shortly after.

As well as the issues on GDAX, investor demand at the funding launch for an ethereum-based messaging app called Status clogged the ethereum network, an industry insider told CNBC.


User makes $1 million off $380?
On the trading forum StockTwits, user John DeMasie posted a screenshot of trade history around the time of the flash crash. It showed one person had an order in for just over 3,800 ethereum if the price fell to 10 cents on the GDAX exchange. Theoretically this person would have spent $380 to buy these coins, and when the price shot up above $300 again, the trader would be sitting on over $1 million. CNBC has been unable to verify the screenshot posted by DeMasie.

This is poor exchange management and infrastructure. People who got the Ethereum @ 10 cents by accident were too quick to exchange in btc not caring about the rate and selling them out @ whatever rate they can get. When they are finished things will be back to normal.

I am not saying that there had not been any Pumps/Dumps in cryptos yes there had been but there are not as many financial frauds by established financial institutions like Insurance Companies, Banks, Mutual Funds, Bonds and most of all the fiat currencies themselves. Cryptos numbers in comparison are far less. So cryptos will not only survive but thrive the people who loose here are the ones who do not have patience and just want to be billionaire overnight.

Cryptos right now are for the ones who can play long enough to make profit not for the people who want to become billionaire overnight. Read all the stories of people who made money from cryptos all had one thing in common...

Patience!!!

Keep always 1 rule in mind if you want to make profits from cryptos.

Always sell in profit no matter how long the wait is.

The solution for this will be a platform to shift people from fiats to cryptos even for normal day operations which will be coming very soon so be patient please.

Thanks. The thing is that vining about something is like self fulfilled prophecy. And most people coming to trade cryptos think of daily profits like in forex or different tradings. Another thing is that the current professionals in the finance field have their interests. So ever since the cryptos started these professionals had been calling cryptos a joke and now when they see it becoming a fact they still do not try to evolve instead they do not predict based on any analysis but rather just say what they wish for and they had been proven wrong again and again.

The thing is to understand how things work and make money while understanding all the factors involved in it. This phenomenon in my own opinion will keep on going until enough people are using Cryptos for their daily life transactions and that will take some time after each rise and fall the cryptos will have a smoother going. The 1st fall was hard and took too long to bounce back then the second one took less time to bounce back and the 3rd one took even less. This time it will be lesser than previous as people are getting used to the curve and learning how things work in crypto world.

Thanks. That is exactly the point of my analysis crypto world is different than the forex. Things go wrong for the people who are coming in to invest and have a forex experience and they try to apply the same rules here for trading and then fall very hard and then this fall is blamed on the cryptos. Whereas this is not the fault of cryptos instead lack of knowledge of the market.

Currently this 2 days all market are down.
It is a correction to a previous rise.
There are also some weak hands wanted to go out and cash it.

They do not know after BTC segwit and ETH PoS that crypto ll be better,
The trains will leave them

Patience is a virtue indeed, thank you for this wonderful article it serves as reminder to newbie traders like me, right now i am holding altcoins til it makes me earn profit, the thing is simple you just have to hold and thats it....

Yes, It is. In cryptos it is never too high to buy. Because it is growing and eventually grow further. We see that in fiats we have the governments printing new money causing inflation but in cryptos most of the coins have limited supply being generated on daily basis and the concept of halving keeps their price stable. If you can buy and forget the cryptos you have in stock for 1 year then check exactly at the same date next year and you will see what you have earned is a lot more. That's just one way of making money people have different strategies and they work for them but 1 rule they all have in common Sell on profit only.

Also this time

http://www.c[Suspicious link removed]m/2017/06/22/ethereum-price-crash-10-cents-gdax-exchange-after-multimillion-dollar-trade.html

This is poor exchange management and infrastructure. People who got the Ethereum @ 10 cents by accident were too quick to exchange in btc not caring about the rate and selling them out @ whatever rate they can get. When they are finished things will be back to normal.

Added to the main article as well.

Thanks cryptos are back in green now my estimate that most of them will go 10% to 20% higher than when the decline started

no need to say much imho, it's natural to have a dump after a rise because investors that bought early will dump at some point, and when they dump it's most fo the time around 2x what they bought, if you don't see a imminent dump at 2x is because not all of them dumped at that price, some wait more, but in the end everyone will dump for profit