Why we need price crashes and panic selloffs

[Johnzky]

I think that corrections from time to time are necessary. Crashes not so much. In a crash many people lose much money. In case that happens to somebody new to the crypto world, that person probably is not going to come back. And you can't expect any further investments from his side in cryptocurrencies. A loss for both sides I think.
Besides, a market that sucks money out of people, I always tghought that's what the banks are for...

correction must always happen for the price wont have complications for the traders not to have false assessments in every coins to invest..this is the big source of lossing when the price of coins does not have real value instead being bubbled by those whales only

[1714790552]

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[1714790552]

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[alphaomega.f]

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. there will be no circulation of coins.

[farhaan]

Your statement seems totally illogical to me.Crash is always not good for bitcoin's progress and even now, we could witness panic selling to be an ongoing act and so bitcoin crash and panic selling would not help for bitcoin price to increase in future.

[STT]

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.

Crash is over used as a word, pullback in bitcoin is normal even if its 50%.  Actually we declined at not a great pace, normally a big crash is like a day event where prices suddenly reverse beyond the control of anyone and faster then even the news can describe.

We didnt really crash, it declined over more then a month.    Thats pretty steady by crypto standards I reckon.   But sure I agree generally, its more harmful if we dont pull back to confirm previous prices.

Distribution raises and expands involvement is how I've read it described.

[AMHURSICKUS]

Crashes in bitcoin is just a part of getting higher profit, if bitcoin price become stable in the top we cannot buy it anymore.
So this big crash is just a chance for us to buy or invest more, because after this big crash big comeback will rise and big profits are waiting for us.

[Canis Majoris]

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.

I think what you're trying to say is that crashes are needed to redistribute bitcoin to the strong hands from the weak hands. In order for the price to increase we will need people with a lower willingness to sell but that doesn't mean that we need a crash for such a thing to happen.

I thought about that but if we proceed from the assumption that the weak hands are small fish mostly, the redistribution you mean will lead to even higher centralization of wealth in fewer hands. Big fish are unlikely to sell their bitcoins for a lower price, in the worst case they would write them off completely rather than record losses. Further, strong hands can allow the price to rise higher because they won't be quite content with tiny profits unlike weak hands ready to run. So strong hands are definitely better "equipped" for the price growth but without a major crash, there won't be wealth accumulation.

I believe the most benefited by crashes in price are the big investors and not the little ones. The strong hands become stronger, the weak hands become weaker and in some cases, the weak hands lose all their coins... Surely some new enthusiasts benefit themselves from crashes too, as it's a good opportunity to buy cheap and hold, but for each $1 profit a new enthusiast/little fish makes, a whale is making $100 or even more...

Yep, crashes mostly affect those who can't afford to lose their money, and these are weak hands. But it is not just about strong hands becoming stronger at each turn of the wheel. The irony is that with each crash weak hands get removed and less stronger hands turn into new weak hands. And they will get slaughtered at the next dip. But since they are still stronger hands than those kicked out at the end of the previous pump and dump cycle, it will probably require stronger crashes too to get them thrown out of the market. And while crashes will likely lead to higher prices in the future, we should also expect deeper crashes along them as well.

So you basically want people to sell at a loss and lose money, so that things could be better for you. I rather them sell at that little profit that you mentioned and then get out, and for the price to steadily rise.

This crypto world is like every man for themselves.

What I mean is that OP you're looking at it on how it will best benefit you, and in a way dismissing those who sell at a loss. They certainly do not want to sell at a loss.

I fully understand what you both mean and I agree with your points wholeheartedly but we should keep in mind two things. First off, no one forces anyone to join this game, and second, this is a zero-sum game anyway where someone's profit is necessarily someone else's loss. So you are right, of course, every man is for themselves here. But you know the rules and if you don't accept them, you should stay away from the game. You have that choice.

[Harlot]

It is how Bitcoin and other cryptocurrencies roll. Everytime Bitcoin falls all the things I will see is that Bitcoin will fall and it is the end of it but when I see Bitcoin rising again it is a proof that Bitcoin is not a bubble and it is proving other people wrong. Let us think of it that every time Bitcoin goes down it is the time where Bitcoin is testing as holders if we can endure the red market. Crashes, Dips, and Corrections are all the things that I love about Bitcoin as it is an opportunity for me to buy it cheap, as a late entry in the market the price corrections are my only opportunity to increase my position without adding any capital.

[dunfida]

It is how Bitcoin and other cryptocurrencies roll. Everytime Bitcoin falls all the things I will see is that Bitcoin will fall and it is the end of it but when I see Bitcoin rising again it is a proof that Bitcoin is not a bubble and it is proving other people wrong. Let us think of it that every time Bitcoin goes down it is the time where Bitcoin is testing as holders if we can endure the red market. Crashes, Dips, and Corrections are all the things that I love about Bitcoin as it is an opportunity for me to buy it cheap, as a late entry in the market the price corrections are my only opportunity to increase my position without adding any capital.

Not only that which having price corrections do really signifies on having a very healthy market which i would gladly see if prices do behave on that way because if we do see only just rising up its price most of the time then its not truly a healthy market which do definitely can be called as a bubble or manipulative type of market which we dont really like to have because we do know on how it works and how those whales will really make money out of average traders or investors below.

[salterious]

Not only is that a unpopular opinion but it is the only stance to have really on Bitcoin going up and down. If you think it will always go up you are delusional and don't understand free markets. If you know Bitcoin's graph will be stochastic in nature, you understand free markets and you OP you get the free markets unlike most people in the world.

[dogandogru]

These crashes or so-called price correction is necessary as it provides the opportunity to traders to enter the market at a cheap rate.

[RavRider]

I think theres a big difference between a crash and a correction. After a crash the coin is worthless and dont recover. Thats not what happend in the past weeks. We got a correction because bitcoin rised to fast too much. So the panic sellers just make it worse, but it wasnt a crash. Everybody whos in trading and stock markets knows that we need corrections. So we need corrections, yes, but we dont need those panic sellers!

[Hirameki]

Its just a signal or a notification to us or rather a wake up call for us that, we should go buy more of it we should invest on it, now is the time to do that, appling law of supply and demand, you know how it works i dont need to further elaborate it to you. But thats how it goes, demand goes up, prices goes up.

[Biscutard]

Its just a signal or a notification to us or rather a wake up call for us that, we should go buy more of it we should invest on it, now is the time to do that, appling law of supply and demand, you know how it works i dont need to further elaborate it to you. But thats how it goes, demand goes up, prices goes up.

Basically if you are an active day trader this is what you should do but not everyone are an active day trader some of us are likes to hold their crypto until the prices rises up and it will be a good thing as a long term trader rather than a short term trader.

[edgycorner]

Yup, even I believe that the price increase is greatly fueled by the loss from people who sell for less.Just like how pyramid schemes pays its investors trough the capital of late investors.

Thats why a smart investor will always hold and will never sell for a loss.He knows that it will rise up, if not today maybe tomorrow.But it won't stay at red forever.
Most of the people will panic and will flow with the majority by selling off what they own for a loss.Making the dip even more concave.
But everyone isn't a winner.
Every time bitcoin rises back and the smart investor always wins.Because of the loss gained by noobs.

[orkoso]

These market turns are good also to teach everyone how trading and having digital assets is. Just invest cautiously at first until you know the basics of all this world.

[Canis Majoris]

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.

Your statement didn't make any sense to me. Bitcoin's price depends on many factors and not just on what traders want to do. The situation in your statement represents a very small fraction of the entire bitcoin market. First of all, you need to understand that we don't have a regulator in bitcoin market who will step in when the bitcoin price is falling. So the entire bitcoin market reflects the raw emotion of the public. Definitely speculators playes a big in it, but that's not all.

We have a lot of investors who still believes in bitcoin and don't sell off their holdings just because the price is low. Instead the lower price gives them an opportunity to score more bitcoins at a lower price and average out their buying price. We are too small to judge a reason for bitcoin's price decrease as it is based on many factors.

Well, I'm not quite sure if I understand your point correctly but isn't the price of any traded asset defined by the balance of supply and demand? I like to think that it reflects what traders actually do and this is what "the raw emotion of the public" ultimately comes down to, that is either selling or buying a coin. Also, I don't fully understand how a regulator in the Bitcoin market or its lack relates to the point I'm trying to make here. Sorry if I wasn't very clear in my post and caused some confusion.

I think theres a big difference between a crash and a correction. After a crash the coin is worthless and dont recover. Thats not what happend in the past weeks. We got a correction because bitcoin rised to fast too much. So the panic sellers just make it worse, but it wasnt a crash. Everybody whos in trading and stock markets knows that we need corrections. So we need corrections, yes, but we dont need those panic sellers!

I think it is a matter of convention mostly. Personally, what you refer to as crash, I'd rather call a failure or fiasco, the f-word.

[stomachgrowls]

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.

Crash is over used as a word, pullback in bitcoin is normal even if its 50%.  Actually we declined at not a great pace, normally a big crash is like a day event where prices suddenly reverse beyond the control of anyone and faster then even the news can describe.

We didnt really crash, it declined over more then a month.    Thats pretty steady by crypto standards I reckon.   But sure I agree generally, its more harmful if we dont pull back to confirm previous prices.

Distribution raises and expands involvement is how I've read it described.

I agree on this one which it cant really be considered as a crash yet we are still seeing some huge percentage price decrease but you cant blame people on calling it as a "price crash" since they do always expect price would really be high in bitcoin and into any other altcoins in the market and we should be grateful on seeing price corrections because this do truly indications that we do have a healthy market rather than seeing a stable appreciating price which isnt really normal at all.

[Bolt Brownie]

Don't get me wrong, but I think that your view is way to focused on price and speculation and you should really focus on a fundamental view. If you consider bitcoin development potencial, and current adoption level, it's obvious that the price will rise if bitcoin succeeds in it's goals. It's "simple" mathematics and offer/demand principles. Bitcoin fundamentals alone, justify the investment, and if people invest the price will rise.

Of course that speculation will always come into play, and that is what makes the price crash and move forward in cycles. Some people just panic sell for no reason, others understand that's how the markets work, and sell to be able to buy at a lower price, thus maximizing their investment. There are of course those that don't want to risk trading, since it's hard, and still believe in the bitcoin fundamentals and consider it a good investment, so they will just hold.

The educated investors that also know how to trade don't really need crashes for the price to rise, but they do like them because they can use the dips to maximize their investment. The educated investors that don't like to trade, don't really care about the crashes and will just patiently hold their coins until they can use them. The other guys, those panic sellers and fomo buyers, are just here to feed the others until they educate themselves.

[Canis Majoris]

Don't get me wrong, but I think that your view is way to focused on price and speculation and you should really focus on a fundamental view. If you consider bitcoin development potencial, and current adoption level, it's obvious that the price will rise if bitcoin succeeds in it's goals. It's "simple" mathematics and offer/demand principles. Bitcoin fundamentals alone, justify the investment, and if people invest the price will rise.

Of course that speculation will always come into play, and that is what makes the price crash and move forward in cycles. Some people just panic sell for no reason, others understand that's how the markets work, and sell to be able to buy at a lower price, thus maximizing their investment. There are of course those that don't want to risk trading, since it's hard, and still believe in the bitcoin fundamentals and consider it a good investment, so they will just hold.

The educated investors that also know how to trade don't really need crashes for the price to rise, but they do like them because they can use the dips to maximize their investment. The educated investors that don't like to trade, don't really care about the crashes and will just patiently hold their coins until they can use them. The other guys, those panic sellers and fomo buyers, are just here to feed the others until they educate themselves.

I don't get you wrong because I'm perfectly fine with your idea. It could be rephrased that we need real adoption if we want consistent growth. I completely agree with such view if that is your point. Here, in this thread, I'm trying to describe what happens in practice irrespective of our own ideas about how Bitcoin should develop. In other words, I focus on what we have, not on what we want or should have. In a sense, it is not like my idea how things should go on in general. And, yes, I agree that organic growth is better than speculative.

[Canis Majoris]

Here we go again!

Many traders, me included, have been closely watching Bitcoin behavior these days, and it looks like my idea about the necessity of dumping bagholders holds some water. The last few weeks we saw a few feeble attempts at breaking through the resistance which had built up around $12k. We failed, and the reason why we didn't succeed is most likely due to a lot of people wanting to sell at their entry points. These people should have sold at a loss when Bitcoin crashed to $6k in early February but they obviously knew better and didn't want to book losses so they held to their precious coins. Now there may be another storm brewing which will take us down the hill and make people sell in panic to free the road to new highs in the near future.