Why we need price crashes and panic selloffs

[dado7]

Canis, your thinking is valid and you got a point. You are thinking out of the box, I like that.
However, I think you got it just a little bit wrong. Yes, if speculators want big profits it is indeed beneficial to them for the market to correct (this should be the right term, not "a crash", a crash means that the market went past the possibilities of a quick recovery and it never happened with Bitcoin, at least not so far). It is also normal to see the market rise in steps, the market just rising up is an ideal that cannot be reached in the real world (although Bitcoin's run from the end of the last year was crazy.

What Bitcoin needs is for the weaker hands (Poker expression is deliberate) to leave the market thus leaving only the strong holders - albeit corrections this actually stabilizes the market. You can consider the market mature only when it stabilizes and that would mean that generally only strong holders are left and the 1-5% percent of weak holders and daily speculators cannot hurt/destabilize the market. The current situation when you have the market reacting to almost every news out there shows us that Bitcoin is far from maturity and that is the ideal situation for experienced investors to take opportunities and take all the money from the fish (Poker expression is deliberate yet again).

[cizatext]

Well that is impossible because bitcoin can never crashed in other to rise or redistribution of bitcoin the technology behind bitcoin has made it impossible for it to be control and the only thing that can affect it price is either low demands because bitcoin operate on the economy law of demands and supply and at that as time goes on bitcoin get more popular and get generally accepted.

[Palmerson]

Yes I do think you have a point. The rising of the value of bitcoin could somehow be because of the them who do the panic selling. Some investors who at the time when the price drops take it as an opportunity to buy the coins and when everything is bought the supply is lowered again so that the prices rices also. During such time as the price goes high, the investors then analyzes the market for the right time for them to sell their coins again not at a losing point but when the price is really high. So as a general conclusion in this BTC will always be a roller coaster ride. Up and down crashing and dumping and yet again rises up just to fall endlessly in the pattern. Which gives the reason why it is so volatile.

It seems to me that the reason for the large volatility of the cryptocurrency market is the unification of the cryptocurrency and Fiat markets. Dollars has long been captivated the whole world. There are many people who have a large number of unsecured dollars. They can always have the opportunity to buy crypto-currencies in large quantities and to manipulate that market.

[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.

And I would say you definitely have the right to be bothered or even get worried. You don't see the reason because you are searching in the wrong place or rather at the wrong time. You are looking for explanations in the stock market of today but you should sooner be looking in the stock market of the dotcom era. The cryptoverse today is much more like the dotcom bubble of late 1990s than it is like today's stock market. Bitcoin as well as other cryptocurrencies are just too speculative without any real value in Warren Buffett's terms to support their price in the long run. Stocks, on the other hand, have at least some value because companies behind them are producing real shit, not just vaporware as it was with dotcoms back in the day and now with cryptocurrency coins and tokens.

[vicvicto17]

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.

And I would say you definitely have the right to be bothered or even get worried. You don't see the reason because you are searching in the wrong place or rather at the wrong time. You are looking for explanations in the stock market of today but you should sooner be looking in the stock market of the dotcom era. The cryptoverse today is much more like the dotcom bubble of late 1990s than it is like today's stock market. Bitcoin as well as other cryptocurrencies are just too speculative without any real value in Warren Buffett's terms to support their price in the long run. Stocks, on the other hand, have at least some value because companies behind them are producing real shit, not just vaporware as it was with dotcoms back in the day and now with cryptocurrency coins and tokens.

We can't blame Warren Buffet for his era. Yes We're in 4th industrial period and i would love to see what cryptocurrency looks like 2 years from now. after Halving some coins will eventually fall down. I will be happy that those coins who has a real use will stay and some of them will fall, One thing for sure there are Crypto enthusiast that holding good coins and probably they will hold it for long term.

[Dragon5]

Yep, you're right. That is a usual technology to make newbies sell in panic, and most of them sell. And more and more disappointed ordinal investors, average people are left without a penny. Meanwhile rich are getting wealthier all the time

[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.

When it comes to bitcoin and the price movement,it all depends upon the news coming out of a country,if the news is negative the price will go down and so on,it is entirely dependent upon current events and anything can happen at any given time,there is a massive sell off from the old MTgox and i think that is holding the market down for a while and it might continue like this for a while.

It seems that for a while might take a long time to complete. Remember, nothing is more permanent than the temporary. If only one whale was able to crash Bitcoin almost 3 times, what will happen if a dozen of them decides it is time to cash out? Bitcoin will likely fall to 3 or even 2 digits. News can affect prices to a degree but in most cases their effect will be limited and short-lived. Whales and their actions affect prices by far more dramatically.

[pitiflin]

Bingo on the part where you mentioned about wannabe traders. You do realize that like 75-95% of traders are like that. Prices going down is healthy but if traders lose money, then more money goes to the whole which then defies the whole point of decentralization concept as in markets not being controlled by anyone.

[Canis Majoris]

Canis, your thinking is valid and you got a point. You are thinking out of the box, I like that.
However, I think you got it just a little bit wrong. Yes, if speculators want big profits it is indeed beneficial to them for the market to correct (this should be the right term, not "a crash", a crash means that the market went past the possibilities of a quick recovery and it never happened with Bitcoin, at least not so far). It is also normal to see the market rise in steps, the market just rising up is an ideal that cannot be reached in the real world (although Bitcoin's run from the end of the last year was crazy.

Well, opinions may vary but as far as my opinion is concerned, I think that a price fall as low as 30% of December highs pretty much counts as a crash. And we are still half the maximum price of $20k. We haven't seen a fall that massive since the Gox fiasco, so it is not something which can be called "normal" whatever yardstick you use. Anyway, right now it is definitely not about "market rising in steps".

What Bitcoin needs is for the weaker hands (Poker expression is deliberate) to leave the market thus leaving only the strong holders - albeit corrections this actually stabilizes the market. You can consider the market mature only when it stabilizes and that would mean that generally only strong holders are left and the 1-5% percent of weak holders and daily speculators cannot hurt/destabilize the market. The current situation when you have the market reacting to almost every news out there shows us that Bitcoin is far from maturity and that is the ideal situation for experienced investors to take opportunities and take all the money from the fish (Poker expression is deliberate yet again).

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.

[youngagethinker]

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.

In order for BTC being the ideal medium of transaction, it is pretty bad that we have these crashes and panic sell offs. As for the sake of trading we need this because this is where most of the traders got their earnings, at the crash and dumps.
We are still at the early stage of crypto, that's why some panic sells specially for the whales are critical in order for the supply to be distributed to millions of people. If they will not sell, then there will always be a threat in the market in every moment because a single entity can make a dump and can ruin a stable price if he has a lot of coins.

[streazight]

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.

When it comes to bitcoin and the price movement,it all depends upon the news coming out of a country,if the news is negative the price will go down and so on,it is entirely dependent upon current events and anything can happen at any given time,there is a massive sell off from the old MTgox and i think that is holding the market down for a while and it might continue like this for a while.

It seems that for a while might take a long time to complete. Remember, nothing is more permanent than the temporary. If only one whale was able to crash Bitcoin almost 3 times, what will happen if a dozen of them decides it is time to cash out? Bitcoin will likely fall to 3 or even 2 digits. News can affect prices to a degree but in most cases their effect will be limited and short-lived. Whales and their actions affect prices by far more dramatically.

Hundred percent agreed with your statement. People are always talking about who is controlling the prices of bitcoins. Even though bitcoins have been affected with different fraud news from China and Japan and other countries, still it managed to make place in hearts of users.

Whales are there to disturb this place and shrink out bitcoins from the minds and hearts of people. And they becoming successful every other day because of panic sellers.

[Tapyaks72]

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.

When it comes to bitcoin and the price movement,it all depends upon the news coming out of a country,if the news is negative the price will go down and so on,it is entirely dependent upon current events and anything can happen at any given time,there is a massive sell off from the old MTgox and i think that is holding the market down for a while and it might continue like this for a while.

It seems that for a while might take a long time to complete. Remember, nothing is more permanent than the temporary. If only one whale was able to crash Bitcoin almost 3 times, what will happen if a dozen of them decides it is time to cash out? Bitcoin will likely fall to 3 or even 2 digits. News can affect prices to a degree but in most cases their effect will be limited and short-lived. Whales and their actions affect prices by far more dramatically.

Hundred percent agreed with your statement. People are always talking about who is controlling the prices of bitcoins. Even though bitcoins have been affected with different fraud news from China and Japan and other countries, still it managed to make place in hearts of users.

Whales are there to disturb this place and shrink out bitcoins from the minds and hearts of people. And they becoming successful every other day because of panic sellers.

Bitcoin are controlled with middle class investors that’s why when there are uncertainties would create panic that would make  bitcoin price go down. Yeah we can consider that being new in the crypto stock market this  usually happen, but  at least we leaping up to the next level look the price now how  it grows compare to the previous  years. In other words we are starting to be matured.

[metenjean]

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 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.

[beej]

I think you do have something there, I can see the point and it feels somewhat true because we
see and experience Bitcoin's eccentric rise and sudden rapid fall more occasionally now. As long
as bitcoin stays decentralized it will create and trigger more panic selloffs and at some point crashes
especially with altcoins whom in recent times developed an uncanny link with bitcoins fluctuating patterns.
The crashes and panic selling of investors does have a bit of constituency with bitcoins increasing prices,
it's price' recovers more better as an aftermath to the whole ordeal. Seems like a cycle to me.

[Canis Majoris]

Bingo on the part where you mentioned about wannabe traders. You do realize that like 75-95% of traders are like that. Prices going down is healthy but if traders lose money, then more money goes to the whole which then defies the whole point of decentralization concept as in markets not being controlled by anyone.

It works both ways actually. On the one hand, there is an accumulation of cheap coins in fewer hands when many small traders are panic selling, and this is apparently a bad thing. But on the other hand, if the price crash is caused by some big whale cashing out, which seems to be the case with Mt. Gox coins, it also leads to a more even distribution of coins and more hands having bitcoins, which is definitely a good thing. How many hands will have coins in the end, when the dust settles, remains to be seen, though.

[Daimon88]

Dude I’m always in support of panic sell offs, they are very important. This is a market that we are into and not play thing. There will always be buying and selling for the market to progress, and some people will have lose for others who are more smart to earn from it. So I never advise people not to sell their Bitcoin, all I say is that everyone should sell whenever they think is right. That’s it, nothing else.

[BeGoods]

Dude I’m always in support of panic sell offs, they are very important. This is a market that we are into and not play thing. There will always be buying and selling for the market to progress, and some people will have lose for others who are more smart to earn from it. So I never advise people not to sell their Bitcoin, all I say is that everyone should sell whenever they think is right. That’s it, nothing else.

Sometimes it is needed for the price to decline and we get a chance to be able to buy when price is cheap but the prolonged panic sellofs are not a good thing for the market. I'm afraid the panic will spread to many users and make mass panic and chaos happen. hopefully the price crashes only lasted briefly, not happen for a long time.

[Canis Majoris]

In order for BTC being the ideal medium of transaction, it is pretty bad that we have these crashes and panic sell offs. As for the sake of trading we need this because this is where most of the traders got their earnings, at the crash and dumps.
We are still at the early stage of crypto, that's why some panic sells specially for the whales are critical in order for the supply to be distributed to millions of people. If they will not sell, then there will always be a threat in the market in every moment because a single entity can make a dump and can ruin a stable price if he has a lot of coins.

To be honest, that's what I'm thinking myself, though the outcome largely depends on the causes of these massive panic sell-offs. If they are caused by a big whale and we discard collateral damage in the form of panic sellers at that, the net effect can in fact be a more even distribution of coins after all. The negative side effect may be that, though, more coins may actually be bought by fewer hands, so we can't say it conclusively whether panic sell-offs really contribute to a "productive" redistribution of coins in a major way.

[harimauagam]

It can lead to a price reduction that is not suspected tampa that we realize must be careful in selling it by waiting for prices to rise ,,, can be seen every hour if you want to get a big profit never follow a friend to sell it.

[STT]

Crash and panic is not something you want in a normal market.   Think of a market as a crowd of people talking and perhaps exchanging ideas and prices obviously.       These two elements of extreme price movement and emotion over reason mean these ideas are ignored and little discussion and price discovery takes place.

If nothing else a price that moves too rapidly will not be open fully to the range of buyers and sellers around the globe and as Bitcoin is part of a large market that is always partly sleeping we do need some development time for free exchange and benefit to occur for all.
Orderly market is something you will find the Federal reserve always refers, they dont essentially care about the dollar worth but to lose a market completely even for a day or so is not profitable long term as it disturbs holders and investors who are not trading constantly