Why we need price crashes and panic selloffs

[d1ceplayer]

This is just a thought that occurred to me while reading some posts around here, feel free to discuss it or even criticize it. So if we want Bitcoin to rise in the future, we need it to crash first and many wannabe traders to sell off their coins at a loss when the price is low. If people don't close their positions in panic now and just wait out bad times, they simply won't let prices grow later because they will get out whenever the price rises just enough for them. But if they fix their losses, they will no longer have bitcoins to record minor profits and thus drag the price down in the future. As a consequence, the price can surge higher without a lot of selling pressure at bigger figures when the hype and buying frenzy begins anew.

The bottom line is that it is kinda required for Bitcoin to crash occasionally for the prices to rise higher eventually.

We need price crashes and sell offs, but some people won’t understand. They are all always expecting the price to be going up steady, always. And they never mind the market cap, all they want is steady increase due to their own selfish reasons which will in no way benefit the community. As for me, I like to see the price rise and fall all the time,, cause it’s very important.

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[Canis Majoris]

For me those both situations only make market better for investors to just catch some coins at good prices for trade or just hodl next months.

In fact, I don't want to say that it is better for investors but that's the thing that speculators may be looking for exactly. These are not the same.

Holy moly thats a really negative view you have there.   Bitcoin has been established a fair while now and its done its job every day of operation.   Where exactly do you see the problem with its operation that it deserves such a poor view.   The failure that occurs in price is not part of the protocol itself, this is part of exchange transactions and its mostly down to the people themselves how fast price rises or falls.

Truth be told, I don't have a tooth against Bitcoin. It's how people are using it. But I have nothing against that either. I'm just pointing out that you wouldn't expect a lot of stability from a speculative vehicle. Indeed, that has nothing to do with Bitcoin itself or its protocol. Though I don't think that it's going to work out or just change anything, to an appreciable degree. I mean fixing transaction fees and making transactions instant, for example. The problem is a way deeper, and I'm not sure it can be solved.

[Basmic]

This is just a thought that occurred to me while reading some posts around here, feel free to discuss it or even criticize it. So if we want Bitcoin to rise in the future, we need it to crash first and many wannabe traders to sell off their coins at a loss when the price is low. If people don't close their positions in panic now and just wait out bad times, they simply won't let prices grow later because they will get out whenever the price rises just enough for them. But if they fix their losses, they will no longer have bitcoins to record minor profits and thus drag the price down in the future. As a consequence, the price can surge higher without a lot of selling pressure at bigger figures when the hype and buying frenzy begins anew.

The bottom line is that it is kinda required for Bitcoin to crash occasionally for the prices to rise higher eventually.

It seems to me that now the price of bitcoin can not stabilize and go up even if we do not sell coins. Now there is a mass reset of coins after the ruin of the exchange. Small users don't have enough money to buy so many coins. After the reset will end the price will go up. The concentration of a large number of coins in one hand is probably the biggest drawback of bitcoin.

[rolerVX]

You have points by stating the facts about price crashes and panic sell offs. Yes. Crashes is the way of regaining the power again in this land in terms of prices. The declaration of decline in the market prices can be a positive things or negative things. The impact of this is on the holders. The holders will conclude by assuming prediction that ohh, maybe, what if, why, what will be. The holders will think no hope at all, but some will remain strong in position that it will be back again. Just wait.

[Canis Majoris]

I dont really think i can cope with this, if an economic crashes and panic selloffs happened then that means the reputation of the investment instrument also at risk. Why would anyone want to invest in an instrument that crashed as soon as it surge, it didn't take a month to crash bitcoin since it highest peak. Also i dont think any wannabe traders sell of their coins when the price is low because their volume didn't even mean anything in the market.

We're talking about huge amount of money that could drive a market into a trend, its not about whether the prices will grow because of people buying or selling but how the price will grow "IF" bitcoin still has a meaning and future in the community.People didn't invest in the price, they invest in a value of something. If something has value much and now the price is undervalue then it would be a good decision to invest but a decrease in price didn't have the same meaning as a price crash.

You may not like it but this is how matters stand nowadays anyway. Besides, i don't think we can actually speak about "reputation" here. Price crashes don't hurt it because there's nothing to hurt. Rather, they reveal Bitcoin's true nature, that of a purely speculative asset. In other words, whatever reputation Bitcoin may have built, metaphorically speaking, it was all false and deceit. One shouldn't expect too much from such an asset apart from extreme volatility and rampant speculation. The leopard can't change its spots.

Its true by nature, and thats why i said that i can't agree with this statement that we need price to crash so that people can buy at lower price and hoping bitcoin will rise once again because as we know that bitcoin or any investment assets are at stakes of reputation if they crash. Once that happened there is no turning back, it already happened once last january and i would say that its just a minor crash so basically there are still lots of faith left in bitcoin. However if there would be another case of price fallout, then there is no doubt that bitcoin won't survive long in term of investment instrument.

Well, myself, I wouldn't use the word 'reputation'. As you yourself say later in the post, it is more about faith. And then I certainly agree with you. When Bitcoin crashes so hard, people lose their faith. But that's how things often happen with faith in real life. People who blindly believe in something, which is what faith is all about, typically end up being deceived. So you shouldn't actually be surprised with how the events have been unfolding since December. It was sort of set in stone and written on the wall at that.

[MrRiuss]

because when price crashes and panic selloffs happened, we can buy at the bottom

[pleght]

Decreasing the price of bitcoin for investing people is a great advantage.I do not think the price of bitcoin will continue to fall.I think that the moment purchases will provide good earnings.

[Pendularin]

Decreasing the price of bitcoin for investing people is a great advantage.I do not think the price of bitcoin will continue to fall.I think that the moment purchases will provide good earnings.

We need price crashes to buy a cheaper coin in order to have a advantage to get more profit returns if the prices will pumps. It is not a good way to panic selling bitcoins because probably it will loss our bitcoin and regrets the happening.

[gamaman990]

crashes are good or bad? it depends on which side of the game you are on. it's of course good for those who have sold earlier or come in too late, but bad for those whose hands are weak. People who took out mortgage or took on leverage might go bankrupt due to the crashes. I daresay they won't like any crashes no matter how good it might be for the overall health of the market.

[Canis Majoris]

This is the interesting part of your post. Your main omission is that weaker and stronger hands are a relative notion. I remember I have already mentioned it somewhere and maybe even in this very thread. In a nutshell, there will always be strong and weak hands, there cannot be only strong hands in the market. It's kind of a given. While weak hands leave, less stronger hands remain, but it takes even higher volatility to shake them out. In other words, it works in the opposite direction toward more volatility. Obviously, this is applicable only to speculative markets, but Bitcoin undoubtedly belongs to this category.

Yes, there cannot, but the ratio will change. The market never moves towards more volatility, except if it is in the adolescent phase or reaching its end.
What you mention "it takes even higher volatility to shake them out" I take as a very valuable mention. You are completely right, as the market reaches the stability phase, what was in is mostly left in because the volatility should go in opposite ways in order to shake things out.

I don't really believe we can measure crypto markets by the same yardstick as we do with, for example, stocks, or even just one stock. It could be said that volatility is built in with Bitcoin. There is no significant use for it outside speculation. That means that it can't be stable. When it moves toward more stability, people become bored and they start to withdraw their capital from Bitcoin, which, in turn, leads to volatility. In this fashion, crypto volatility is a self-sustaining process which can maintain itself on its own.

[outsider99]

I think it's all necessary to make changes to market prices, because crashes are needed to distribute bitcoins into strong hands from weak hands. In order for prices to rise and panic behavior, selling at low prices.

[clex_us]

i think crashes happened to balance it all out. if the price of bitcoin just keeps on increasing and it's not decreasing, trading will be impossible because traders will just keep it for long because the longer its kept, the higher its value will be.

[Dragon5]

We have to track all those crushes)) be prepared and learn all the time! We can use Mapofcoins or Coinmarketcap to follow the newest tendencies and price fluctuations. I'm sure most of crushes are quite predictable and we can benefit from them.

[dado7]

This is the interesting part of your post. Your main omission is that weaker and stronger hands are a relative notion. I remember I have already mentioned it somewhere and maybe even in this very thread. In a nutshell, there will always be strong and weak hands, there cannot be only strong hands in the market. It's kind of a given. While weak hands leave, less stronger hands remain, but it takes even higher volatility to shake them out. In other words, it works in the opposite direction toward more volatility. Obviously, this is applicable only to speculative markets, but Bitcoin undoubtedly belongs to this category.

Yes, there cannot, but the ratio will change. The market never moves towards more volatility, except if it is in the adolescent phase or reaching its end.
What you mention "it takes even higher volatility to shake them out" I take as a very valuable mention. You are completely right, as the market reaches the stability phase, what was in is mostly left in because the volatility should go in opposite ways in order to shake things out.

I don't really believe we can measure crypto markets by the same yardstick as we do with, for example, stocks, or even just one stock. It could be said that volatility is built in with Bitcoin. There is no significant use for it outside speculation. That means that it can't be stable. When it moves toward more stability, people become bored and they start to withdraw their capital from Bitcoin, which, in turn, leads to volatility. In this fashion, crypto volatility is a self-sustaining process which can maintain itself on its own.

Well, FIAT money market (and there are a lot of speculation markets connected to FIAT money) is usually measured in a similar way as stocks market while for FIAT money the same rule applies - it's value is made only by what we are willing to add. I like the rest of your comment, especially the statement about the boredom, I believe that is true.

[metenjean]

Well, myself, I wouldn't use the word 'reputation'. As you yourself say later in the post, it is more about faith. And then I certainly agree with you. When Bitcoin crashes so hard, people lose their faith. But that's how things often happen with faith in real life. People who blindly believe in something, which is what faith is all about, typically end up being deceived. So you shouldn't actually be surprised with how the events have been unfolding since December. It was sort of set in stone and written on the wall at that.

Thats why i said for now people might still have faith in bitcoin but whats left of it if there would be another fallout? I prefer reputation because bitcoin is an investment instrument and every investing instrument uphold their reputation to stay alive and stay stable to maintain their investor. If bitcoin happened to dropped again like this recent days and reached a crash towards $2k again then bitcoin will surely lose reputation among investor as investor lose faith to bitcoin.

So i think its a mutual concern between bitcoin and investor and its more like wording than actual understanding and no i don't suprised with event unfolding since december as i said in my previous post. If bitcoin really valued much than there is no reason to have a crash and panic selloff. It would only happened "IF" bitcoin really didn't have value anymore and then there will be price crash and if that happened there won't be any rise in bitcoin price.

People didn't invest in the price, they invest in a value of something. If something has value much and now the price is undervalue then it would be a good decision to invest but a decrease in price didn't have the same meaning as a price crash.

[darkr]

For me those both situations only make market better for investors to just catch some coins at good prices for trade or just hodl next months.

True - smart traders try to catch these moments and use them to buy cryptocurrency for fewer prices. It means that only a person with cold mind and heart can finally win in this battle and get his benefits.

[Sled]

We need those kind of things because that is how we are going to make good entries for the market and if we will be patient and wait for the right time to enter the market then we will not be worrying for the possible loss to get since we all know when to enter and exit the market and that is why it is better to study the market first and watch the price actions before making any action.

[Freshmen]

because when price crashes and panic selloffs happened, we can buy at the bottom

They are important somehow. If prices are always trended towards high how can any other person buy bitcoins? That would be like impossible for someone to get into bitcoins world. It would be a train that is passing through a station only once whos ever left it, could never be part of it anymore. So avoiding all such circumstances, developing teams have worked out on it.

[Canis Majoris]

I'm more interested in the causes of these failures. When the stock market falls, there are reasons for this. It is possible to analyze this phenomenon and to make some predictions. But I can't see the reason for the bitcoin price drop. It bothers me. Of course I also do not like a long period of price decline, but this is not the most important for me.

There are a number of reasons of why the price went down, the most important for the recent decrease in price is that someone began to sell a huge amount of bitcoins this scared traders and investors and this made the demand to go lower and when you have a big supply and lower demand the price will go down, however bitcoin is also susceptible to things like FUD and political manipulation but still with each passing year the effect of those two things goes down.

Yes, it has become known that a Mt. Gox guy was selling something like 40k bitcoins December through February, and he still has 4 times as much. And I'm afraid that until he sells it all, we won't see prices rise anymore, to any appreciable degree. People will always think that there's someone who's ready to take advantage of them. Well, there was always someone like him but no one saw them sell their coins yet. Until now.

[darkangel11]

because when price crashes and panic selloffs happened, we can buy at the bottom

They are important somehow. If prices are always trended towards high how can any other person buy bitcoins? That would be like impossible for someone to get into bitcoins world. It would be a train that is passing through a station only once whos ever left it, could never be part of it anymore. So avoiding all such circumstances, developing teams have worked out on it.

You're not making sense. The comparison with a train is ridiculous because if you were standing at a station and the train would pass it you wouldn't be able to get in, right? Now with BTC the price passing a point doesn't limit your ability to get in! With the price at 1000 you can always go in at 1050, or 1200 or any other. You will simply be buying less for the same price, but you will be getting in and you will be gaining more value with time. I can't believe you're really seeing a rising value as something bad.