Why did we experience an overshoot in the price of Bitcoins ?

[fiulpro]

Hello , I found an article and it did seem very interesting, the author tries to explain why Bitcoins broke the resistance and we saw an amazing rally.

https://www.coindesk.com/how-real-is-bitcoins-rally-8-interpretations-of-bitcoins-massive-surge

Banks stacking due to changes in custody rules

Money printer go brrr

Stock to flow model

Robinhood traders piling in

DeFi gain recycling

Buyers exceeding sellers

“Perfect storm”

Dollar crash, negative real interest rates and the search for a new reserve currency

According to the author the following reasons did mark a uptrend  but there are few reasons I would like to add.

- People Investing their stimulus bills
- No jobs !!
- Stock market might be good for the long term , but right now I don't think people can really invest there for short term
- Gold prices is incredibly high
- Good representation of Bitcoins and many countries giving it the legal good to go status
- Bitcoins have outperformed Gold and S and P 500 index
- People in for HODL
- People loosing trust in the dollar which should definitely happen since they printed more money than ever and that a whole bubble that we are seeing right now waiting to take the market down ((+ am not comfortable with trading in US dollar personally too till the time America Gives Racial Freedom to all its citizens and stop treating people like Animals, I would rather risk the volatility ~))

Please do share what to you guys think ? ?

[mk4]

Sure most likely some of those events(or a combination of some of them) caused the price rise, but whatever. In the end, there's really not much we can do to accurately know what specific event caused it. All we know is that the demand increased, hence the price rise. Let's leave it at that.

[NeuroticFish]

After the halving Bitcoin is expected to go up and up; after investing into stocks and gold, the institutional investors also getting Bitcoin.
Of course "Money printer go brrr" may act as a catalyst.

[pooya87]

i am not sure if i want to read an article that has a title calling this rise a "massive surge"! anybody who has ever looked at bitcoin charts (you don't even have to have been around since the data is there for all to see) knows that bitcoin "massive surges" are at least above 80% like what we had in last month of 2017 when price went up about 120% in less than 2 weeks.
in comparison the rise we had recently was a tiny rise at first and within days it reached a size which i would call a medium rise.

- Bitcoins have outperformed Gold and S and P 500 index

i think all the reasons mentioned are already correct but they all contributed a little to the rise. keep in mind that before the Covid panic (which had nothing to do with bitcoin by the way but still affected it all the same) price was already rising and testing $13k so we are still below that mark!
but i think gold rally might have have a bigger effect on the confidence coming back to the market and investors jump at buying bitcoin.
and of course with the way US has been printing Dollar like crazy, the value of dollar is bound to dump hard even if slowly. and that dump means bitcoin price goes up.

[davis196]

- People Investing their stimulus bills

I thought that stimulus bills are for buying necessary stuff,not for investing on stock/crypto markets.

- No jobs !!

Great logic!The "average Joe" lost his job,so now he's gonna invest his savings on the risky crypto markets and become a millionaire in no time.

- Gold prices is incredibly high
- Good representation of Bitcoins and many countries giving it the legal good to go status
- Bitcoins have outperformed Gold and S and P 500 index

So what?There's no historical correlation between the Bitcoin price and Gold prices.The fact that they are moving in the same direction in 2020 can be explained with the corona recession.

- People in for HODL

HODLing by itself can't boost the Bitcoin price.We need increased demand for Bitcoins.

- People loosing trust in the dollar which should definitely happen since they printed more money than ever and that a whole bubble that we are seeing right now waiting to take the market down ((+ am not comfortable with trading in US dollar personally too till the time America Gives Racial Freedom to all its citizens and stop treating people like Animals, I would rather risk the volatility ~))

The destruction of the US based global financial fiat system will eventually happen,but it won't be that soon.

[Lucius]

If we were to single out any important news that appeared recently in the media space then it would be just this -> Banks in US Can Now Offer Crypto Custody Services. We all know that in spite of everything, the USA is in a way perhaps the most important market when it comes to crypto, although some may not agree with it. Again, on the other hand, it is an indisputable fact that Coinbase (the largest crypto exchange) is located there, as well as that 80% of all crypto ATMs are in that country. If we add to this that all eyes are on the SEC when it comes to the possible approval of the Bitcoin ETF, I would say a lot of crypto related stuff revolves around the USA.

However, the real reasons may be a bit different, because the games that take place in the background are not known to us - but it is more than obvious that there is a lot of money behind everything.

[avikz]

I don't know why it has become a habit of the international medias to link a global event to everything that is happening in US. Even though US is the strongest economy in the world, but that doesn't mean that US controls everything global! Having US as a benchmark for cryptocurrency related matters is a gross stupidity!

There can't be a single reason or a single country behind the current surge in bitcoin's price! The possibilities are endless and no one knows for sure why the price shoot up! Coind3sk has only speculated based on US events which may be 10% of the total number of reasons.

[Jating]

I don't think that we overshoot though, that's how the market reacts, maybe some TA says that we should get to $11,500 and see some resistance, it didn't happen, but doesn't mean that we have limits to this price increase.

- Gold prices is incredibly high

Huh? Bitcoin already surpasses the price of gold many times already.

And I highly doubt that the second round of stimulus package will be invested on bitcoin. People needed cash as this point to buy food that will make them survived in this pandemic, this is just pure speculation.

I don't think that we need to complicated things here, it's just the basic supply and demand that pushes the price to $11,800.

[thesmallgod]

Sure most likely some of those events(or a combination of some of them) caused the price rise, but whatever. In the end, there's really not much we can do to accurately know what specific event caused it. All we know is that the demand increased, hence the price rise. Let's leave it at that.

That has been happening for so long and it didn't have an effect on the price. If you recall there are many topics regarding predicting the fall of the price during the first phase of the covid19 pandemic but the price did not fell but was steady for a while. The point is that when the price goes up or down, people attribute it to many factors that have been evolving but were not having an effect on the price. My submission is that there is a direct influence by the whales to pump the price and not because of any factors stated above

[Reid]

2 and 3. I am sure of that.
Without jobs, they need to make something out of their savings.
It cannot just stay as savings in banks for you won't feel any profit from it.
Something stronger is much needed. A currency that moves so quickly and can also be traded by themselves without paying a broker or a middleman.
Which continues to stocks.

But, that may just be a small part of what the real reason is.

[Yaunfitda]

Smart investors are simply fleeing to BTC, let's just say that. The US and the world economy is falling, and investors are looking for the best option right now which is: bitcoin. And then more investors follow suit, pushing to a level that we are not supposed to be at this juncture of the bull run. You just have to think about it, would you rather have your money in banks, stocks, gold (precious metals) or cryptocurrency such as bitcoin and ethereum?

[Eureka_07]

Does bitcoin and gold related to each other?
I do not think they are proportionally correlated because bitcoin is not even backed up by gold.

I've took a liitle time to search, based from Cointelegraph:

  When computing the correlations for the entire sample (from April 2013 until December 2019), between gold and Bitcoin prices, the data showed that they are considerably correlated at 46.5%, with 0% being not correlated, 100% meaning it’s fully positively correlated and -100% meaning it’s fully inversely correlated.

[Eternad]

Sure most likely some of those events(or a combination of some of them) caused the price rise, but whatever. In the end, there's really not much we can do to accurately know what specific event caused it. All we know is that the demand increased, hence the price rise. Let's leave it at that.

That has been happening for so long and it didn't have an effect on the price. If you recall there are many topics regarding predicting the fall of the price during the first phase of the covid19 pandemic but the price did not fell but was steady for a while. The point is that when the price goes up or down, people attribute it to many factors that have been evolving but were not having an effect on the price. My submission is that there is a direct influence by the whales to pump the price and not because of any factors stated above

That's how the market truly reacts, sometime the hyps attributes in the prices like the DeFi hypes as well the issues of legalising crypto in other countries. The changes in price is indeed volatile that sometimes we don't notice how the price changes fast. I was able to monitor it these Pandemic due to our still quarantine status and sees how high the prices can be when there are hypes and issues happening around and it can also fall anytime sinceany we're actively trading now.

[joniboini]

Most of the time, these guys are connecting the dots of various things, trying to stir up a story that does not even exist, but then cause a change of sentiment on the market. I don't trust these guys but if I'm doing some trading, I'd read the title to predict the sentiment of the market.

Most of the time it was a pain in the ass, which is why holding undervalued asset is way easier for me.

[ufaiz50]

Market influences or fluctuations in cryptocurrency can be caused by anything but I prefer economic problems for now, since the US has had problems with their economic development. Somehow cryptocurrency is more alive now because the world economy is in trouble caused by co-19. Based on my assumption, that all of what is said has a bearing on the crypto market, so I think that's all the reason for what caused this to happen. we can only assume and will not know the real cause.

[shata]

Smart investors are simply fleeing to BTC, let's just say that. The US and the world economy is falling, and investors are looking for the best option right now which is: bitcoin. And then more investors follow suit, pushing to a level that we are not supposed to be at this juncture of the bull run. You just have to think about it, would you rather have your money in banks, stocks, gold (precious metals) or cryptocurrency such as bitcoin and ethereum?

At this point of time, I wished i could have stocks, gold and bitcoin. This is what do we called diversified investment. As It is true that cryptocurrency is at its frenzy, eveyone is buying. However, for long term perspective economy will survived together with your investments to known stocks  or gold.

As to the current scenario of bitcoin, I totally agree on most of your marked stimulus about current bitcoin rally aside from 3 and 5. Bitcoin is also not so cheap either, it is way far expensive than Gold price per share. And as to the prospect of bitcoin outperforming gold and S&P index, it doesn't matter at all. S&P and bitcoin had correlated for clearly a year based on a report made by coindesk; thus, it provides an impression that market will not aligned on people's manifestation rather to the institutions as they play the market.

People buying bitcoin because of our current economic problem may become fuel for bitcoin's next parabolic move.

[Lucius]

Having US as a benchmark for cryptocurrency related matters is a gross stupidity! 

It’s a lot easier to write that something is "gross stupidity", rather than realistically looking at the facts for which something needs to be taken into account. Like it or not, the fact is that most of the world revolves around what's going on in the US - and although I don't like it, I accept that it's a reality. If their banks have received a license for custody crypto services, this is without a doubt very positive news for them and for all global investors, after the same thing happened in Germany at the beginning of the year.

If you live in the belief that something important is happening in the world today without the influence of the US, then the US-China trade war is just a fabrication of the media, the sanctions for which hundreds of millions of people suffer are also not true.

If, by any chance, Bitcoin in the USA experienced a fate like in China, I would ask you what would happen then - progress or something else?

[mk4]

That has been happening for so long and it didn't have an effect on the price. If you recall there are many topics regarding predicting the fall of the price during the first phase of the covid19 pandemic but the price did not fell but was steady for a while. The point is that when the price goes up or down, people attribute it to many factors that have been evolving but were not having an effect on the price. My submission is that there is a direct influence by the whales to pump the price and not because of any factors stated above

Though I'm not saying what OP said is what caused the price rise, how do you know that it isn't? Just because there wasn't an immediate effect hence it can't be the reason ever? Sure, it could be "tHe wHaLeS", but in the end it always boils down to NO ONE KNOWS hence why I'm heavily pushing the typical supply and demand narrative.

[BrewMaster]

it is the goold old FOMO that we have been expecting to happen for a couple of weeks. each time bitcoin tested the $10k resistance and didn't break it and filled the pockets of the accumulators as the panic sellers panic sold, the upcoming FOMO became stronger.
and without any surprise as the $10k was broken a surge of buyers rushed to exchanges and started a panic buying hence the jump to that high level in a very short time. in fact i was even expecting to see $13k+ as i mentioned it multiple times before but still $12.2k is still close.

[Sanugarid]

Mainly because of the speculation for the mass, as we are all bored in our own houses we think of our things quite a bit strange, like monitoring the price each and every minute just in case a huge pump happens. And just days go it did, but it is noticeable for most though, and guess what there are people who have rid the tide of the pump from $9k range to $11K and now it is resisting a new support. If we base on the recent news, there are steps being made by some major companies towards the crypto, worth mentioning the VISA filing their own crypto system patent for linking fiat-crypto transaction. If I were a person who is doubting crypto, this might be the mind changer for me.