Oh thank you. Yes I just saw the text below price in google. So, in 2017 there were many people that got rid of their bitcoins? That's why cryptocurrency crashed in 2018.
It was either a panic sell, whales cashing in millions or both. Whales usually have the ability to change the market trend within a click of the mouse.
When lots of people buy, the price goes up like at the end of 2017. In jan 2018, lots of people sold - making the price fall.
But putting these aside, if you take a look at the 2017 charts, you'd see that prices higher than $15-16k were only hit for short periods of time. While you take a look at the chart and say "wow the price used to be $20k in 2017", remember it was only a matter of minutes, hours or maximum a few days. Only few lucky ones were able to
sell at the highest price - while other inexperienced traders probably bought.
Let me explain how the price falls/rises:
Take a look at the following order book (order books contain price listings of sellers, sorted by price) from an exchange:
Say you have 10 BTC and decide to sell them instantly on the market, and you meet exactly this order book. What choices do you have?
- The price is currently $8,686.0843. As you see, the first trader on the buy orders list (the blue list) offers $8,684.6957 per Bitcoin but only wants to buy 1.1612 BTC. Because you have 10 BTC, you cannot sell
instantly to this trader. Therefore, to sell 10 BTC instantly, you have to sell at the following prices:
-> 1.1612 BTC @ $8,684.6957 (completing the first blue buy order)
-> 1.0137 BTC @ $8,684.6757 (completing the second blue buy order)
-> 0.8663 BTC @ $8,684.5957 (completing the third blue buy order)
-> 0.7926 BTC @ $8,681.5958 (completing the fourth blue buy order)
-> ... and so on, until you get to a total of 10 BTC sold.
- Because you sold to the first buy offer every time, you had to sell at lower & lower prices - hence, influencing the market negatively. Now imagine you had 10k BTC. If you wanted to create massive panic, you could sell
instantly to all the available offers and create an enormous price dump.
If you decide to buy, you'd have to do the same thing: buy from the first trader on the red (sell) orders list. The more you buy, the more expensive you'll have to buy at. With a large enough purchase, you'd influence the price positively - creating a price rise.
In other words, if you decided to sell BTC at a minimum of $8,600.00 and had enough Bitcoins to fulfill all buy orders until you hit that price, you could and you'd drop the price to $8,600.00 for some time. The opposite effect is met when purchasing.
