How prices move from one level to another, without having to trade at any price in between, is important. The interaction between buyers on the bid and sellers on the offer is the key to understanding how prices trend.
Once the whales build a position, they hold the majority of the inventory. By maintaining high levels of stock, they can place buy orders to drive prices up. If there are no sellers above the buy price, the bids will outnumber the offers and prices will rise.
And when prices break out of an accumulation base, they start to trend. This is when the media coverage begins. This is when the public start to buy. This is when prices trend.
It’s funny — most people intuitively understand this when it comes to everyday life.
Let’s say you own a market stall and you trade strawberries.
Early in the morning, you go to your supplier, and you pay the wholesale prices for your goods.
You get to market, and you set out your stall. That’s the supply.
Then you wait for the crowds to turn up.
At first, business is slow, but you don’t worry about it because you’ve got all day to clear your inventory.
By lunchtime you’ve only sold half of what you expected, so you get off your chair and get active.
“Hello Madam, three for a pound?”
You drop your prices to attract demand.
Better to breakeven on this day or take a small loss. You can’t win them all.
Almost everyone understands this when it comes to strawberries. But turn the strawberries into shares of stock, or crypto coins and tokens, and the opposite happens.
People, in general, become confused and have no idea what’s going on.
If the market stall is going to close in 10 minutes and there are kilos of strawberries still laid out, there’s no way you’d pay the market price. You’d either ask for a discount or the trader will offer you one, or both.
Metamosphosise the strawberries into real estate, Apple shares, Bitcoin or Ethereum, and all the intuition disappears.
Why does this happen?
Why do otherwise well educated and highly intelligent people behave like this?
Would you second guess yourself in the last few minutes of the day in front of a well-stocked market stall? You’d know what to do instinctively, and you’d nail a bargain, yet why do most people ignore their instinct and intuition when bidding for an asset like cryptocurrencies or stocks?
https://www.altcoinsidekick.com/blog/electronic-cocaine
