Amateur Traders Cause Bubbles

[Nunoluck]

That's one of factors that influence bitcoin market volatility. I think amateur traders are mostly lack of skill so they tend to just follow market trend then doubt about their decision, many amateur traders could not distinguished which one is bulltrap or which one is bullish signal. Honestly, I also made many mistake like that but day by day I learn to do trading correctly and of course it is not easy than i think.  So for now I just follow my personal pattern to deal with bitcoin volatility, I only buy when most of people sell and sell when most of people buy, I use this pattern and it works. Most of bitcoin or cryptocurrency users are traders so volatility will be very common thing in cryptocurrency investment. I believe that if Bitcoin spread evenly then bitcoin will be less volatile.

[1714681501]

1714681501

[magneto]

What a load of rubbish.

It's as if they haven't seen the state of the real estate market and how that is the biggest bubble out of anything over the last couple of decades, almost solely driven by institutional investors and developers.

This is a blatant attack on retail investors and their ability to make decisions. The best retail investors are just as capable (if not more so) than biased Wall Street analysts that recommend stocks/funds for their own gain.

[Golftech]

Well, extrapolate that study to bitcoin is not determining but binding.

In any case, amateurs are the raw material or the main agent that gives value to cryptocurrencies or bitcoin, without these users (all of us) what would be the crypto market, being an investor is within everyone's reach, it is a symbiotic balance, that is not seen in the traditional market, few investors (experts) many actions in a market with controlled access.

There are  more amateurs than those who are experienced and wise investors, once those heavy weights

start moving their assets, both sides amateurs are being moved as well, they know how to play from both

emotions and understanding, we can still see this influence from the current situations.

[andriarto]

Well, extrapolate that study to bitcoin is not determining but binding.

In any case, amateurs are the raw material or the main agent that gives value to cryptocurrencies or bitcoin, without these users (all of us) what would be the crypto market, being an investor is within everyone's reach, it is a symbiotic balance, that is not seen in the traditional market, few investors (experts) many actions in a market with controlled access.

There are  more amateurs than those who are experienced and wise investors, once those heavy weights

start moving their assets, both sides amateurs are being moved as well, they know how to play from both

emotions and understanding, we can still see this influence from the current situations.

I see amateur traders as if they are being used by professional traders to launch their strategies. we know like the case of Elon Musk. he spreads the news so that amateur traders can follow, and once they invest in bitcoin, with the power of the media he can influence many amateur traders to buy, when he feels he has had enough, he seems to run away with the money

[Silberman]

Well, extrapolate that study to bitcoin is not determining but binding.

In any case, amateurs are the raw material or the main agent that gives value to cryptocurrencies or bitcoin, without these users (all of us) what would be the crypto market, being an investor is within everyone's reach, it is a symbiotic balance, that is not seen in the traditional market, few investors (experts) many actions in a market with controlled access.

There are  more amateurs than those who are experienced and wise investors, once those heavy weights

start moving their assets, both sides amateurs are being moved as well, they know how to play from both

emotions and understanding, we can still see this influence from the current situations.

I see amateur traders as if they are being used by professional traders to launch their strategies. we know like the case of Elon Musk. he spreads the news so that amateur traders can follow, and once they invest in bitcoin, with the power of the media he can influence many amateur traders to buy, when he feels he has had enough, he seems to run away with the money

While that happened especially in the case of dogecoin I think it is fair to wonder if those people can actually be considered to be traders, after all if you come to this market knowing nothing about trading and relying completely on external influences to take your decisions, are you really a trader? In my mind they do not even qualify for that term, they are just sheep waiting for someone to follow and be slaughtered, but maybe I am being too harsh to them.

[jossiel]

There are  more amateurs than those who are experienced and wise investors, once those heavy weights

start moving their assets, both sides amateurs are being moved as well, they know how to play from both

emotions and understanding, we can still see this influence from the current situations.

The influence is there from those wise investors and big investors and players in the market.

The amateurs are just followers for what they think is good for their own cause. But if they see that the market is not with them, they also don't do anything or take action just as the wise investors does.

They don't do anything if they don't let their emotions control them.

[teosanru]

A study done by the New York Fed suggests that when trading in an asset becomes dominated by amateur traders, it tends to form asset bubbles.  The study further noted that amateur traders do not aggregate private information well and show lower levels of strategic sophistication than professional traders.  It pretty well explains the volatility that dominates the Bitcoin market without being a study about Bitcoin.

Fed Report:  https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr939.pdf

I think it was pretty obvious even without any study proving it. But yes I beg to differ with one thing. I think that such amateurs exist in every market. They are not just here into the crypto markets but do exist in stock markets too. It's just that stock market has become so old and matured that it doesn't has that huge fluctuations because of huge sums involved otherwise the number of amateurs are pretty much the same here too. Also regulations cut down volatility by a slight percentage too.

[Princejebs]

Naturally, I think human is programmed to try to outsmart each other. That's why, whenever they see opportunities, they tried to risk it even when they don't fully have the knowledge of what they are actually doing and when everyone do the same, that's how the bubbles began like joke.
Those who where patient enough to hold from the initial begin take their money out as soon as they sees immense gain, then the late comer becomes the bag holder on lost. 

[fullhdpixel]

There are  more amateurs than those who are experienced and wise investors, once those heavy weights

start moving their assets, both sides amateurs are being moved as well, they know how to play from both

emotions and understanding, we can still see this influence from the current situations.

Shouldn't it be better for veteran traders? I mean think about it, if you are a veteran trader and there are a lot of amateurs in the trading market that means you should be doing better than them and while they are losing money, who are they losing to? They should be losing to the veterans. However most likely outcome during periods like this is that there are people on each side losing money and that is the cause of the coin dropping and everyone being unhappy.

I do not think that we should allow something like this to fully blamed on noobs, sure they are making bad decisions but not like veterans are picking up their slack and making a profit while keeping it high, they are taking advantage of it or they are losing with them. This is why I think there was a huge hype, something can't go up forever, and there was a fall eventually which all makes sense and it is totally fine.

[Yatsan]

Amateur traders do have some implications on the market but they are not that strong enough to dominate the whole market to set it into bubble state. But since they are amateurs that have no decent experience and are having a hard time dealing with the market situation, they were the ones to be easily lured to sell and spread FUD which have a big implication into other users having a sudden moderate movement to happen but that will not exactly be the reason for the bubble. Big institutions or big holders are also the ones dominating the market and it is not duly exact what factor causes the bubble for certain reasons are still unidentifiable

[tippytoes]

Amateur traders do have some implications on the market but they are not that strong enough to dominate the whole market to set it into bubble state. But since they are amateurs that have no decent experience and are having a hard time dealing with the market situation, they were the ones to be easily lured to sell and spread FUD which have a big implication into other users having a sudden moderate movement to happen but that will not exactly be the reason for the bubble. Big institutions or big holders are also the ones dominating the market and it is not duly exact what factor causes the bubble for certain reasons are still unidentifiable

I do agree with that. Amateur traders don't have the capability to cause such bubbles. Most of them are just small time traders. For whales in the market, I don't think they can be considered as amateur traders as they have been in this market long enough to know how to potentially influence the market. Amateur ones may influence others by spreading fud owed to what they have experienced. But I don't think they have the capability to make big impact in the market.

[AndySt]

What a load of rubbish.
It's as if they haven't seen the state of the real estate market and how that is the biggest bubble out of anything over the last couple of decades, almost solely driven by institutional investors and developers.
This is a blatant attack on retail investors and their ability to make decisions. The best retail investors are just as capable (if not more so) than biased Wall Street analysts that recommend stocks/funds for their own gain.

You correctly said that it is the best retail investors who have good abilities, but unfortunately we cannot say this about all amateur traders simply because the absolute majority of them lack knowledge and experience and are prone to making impulsive decisions that are not always justified by the logic of the market. However, the same can be said about any sector of the market. Bubbles can form in different areas of the market and lead to the same results, but the reasons why this happened may be different, but you should not put market professionals and amateur traders in one pile because of this.

[TheUltraElite]

Bubbles can form in different areas of the market and lead to the same results, but the reasons why this happened may be different, but you should not put market professionals and amateur traders in one pile because of this.

Well the cause of the bubble might not be completely prove-able. But the propagation of the bubble is mostly done by the bigger whales. The retail investors are not having a money pile that can move the market to increase or decrease the bubble but the whales do.

So one single amateur trader will not cause the bubbles but the hype that is kept on growing by several or hoards of traders will lead to bubbles. Add to that some social media lowlifes who want to make a profit off the bubbles will cause discordance in the growth of the bubble leading to problems for those who are holding for short term.

Overall, it is a part of the bull/bear cycle and bubbles are going to happen. Point is to profit from the rise and not be stubbornly following someone because they "seem to be too active on social media". Retail investors can also take calculated decisions and educated guesses, it is not correct to always blame them for bubbles.

[AicecreaME]

A study done by the New York Fed suggests that when trading in an asset becomes dominated by amateur traders, it tends to form asset bubbles.  The study further noted that amateur traders do not aggregate private information well and show lower levels of strategic sophistication than professional traders.  It pretty well explains the volatility that dominates the Bitcoin market without being a study about Bitcoin.

Fed Report:  https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr939.pdf

I really think amateur traders play a big role  in bitcoin volatility aside being its natural state.

Nowadays, bitcoin became more popular. It has higher demands compared to the past few years due to pandemic situation. The majority are finding ways to earn some income as well as alternative form of entertainment or past-time that could help them survive being stuck at home. That being said, a lot of begginers have entered the bitcoin community, which made them take a large portion of the users of btc.

It is a nice thing to have new users, don't get me wrong. However, these newbies usually tend to follow gossips and random information circulating the mainstream media. The begginers are usually worried and bothered so much that they ride the hype and participates to selling despite the losses due to FOMO. With this, the market becomes more volatile than it originally is. And most of the time, the whales are the ones benefiting - they can buy coins at a lower price and they can gain more profits.

[jrrsparkles]

What a load of rubbish.

It's as if they haven't seen the state of the real estate market and how that is the biggest bubble out of anything over the last couple of decades, almost solely driven by institutional investors and developers.

This is a blatant attack on retail investors and their ability to make decisions. The best retail investors are just as capable (if not more so) than biased Wall Street analysts that recommend stocks/funds for their own gain.

Traders and retail investors are highly manipulated but we should stand out from them if we want to be successful and it seems most people in the crypto community is not doing it that is why we are always facing the panic selling whenever the price drops a bit, but we have to get used to it and also it can be an advantage for an individual to buy the assets for cheap prices who are willing to HODL.

[oHnK]

What a load of rubbish.

It's as if they haven't seen the state of the real estate market and how that is the biggest bubble out of anything over the last couple of decades, almost solely driven by institutional investors and developers.

This is a blatant attack on retail investors and their ability to make decisions. The best retail investors are just as capable (if not more so) than biased Wall Street analysts that recommend stocks/funds for their own gain.

Traders and retail investors are highly manipulated but we should stand out from them if we want to be successful and it seems most people in the crypto community is not doing it that is why we are always facing the panic selling whenever the price drops a bit, but we have to get used to it and also it can be an advantage for an individual to buy the assets for cheap prices who are willing to HODL.

When you decided to hold ur asset, u should be aware that hold isn't always safe ur asset but u need to use another strategy. Maybe hold can work if u buy BTC at the lower price since several years ago, but if you buy at the top price, ur asset become shit if u still hold without take average down strategy. For example, I decided to hold without take another way then I got loss so much. My unrealise gain become realise loss, and give me much hit. This is pure my mistake because didn't watch my portofolio as well.

[ChrisPop]

I don't think the "amateur" traders have the financial power to cause bubbles. Bubbles are a joint creation between all the market participants. After all if for example TSLA is trading at 1000x earnings that is the market consensus. Same with Bitcoin - amateur traders are unlikely to have the deep pockets to sustain liquidity at 5-6 figures levels. Sincerely, I haven't only read that the experiment was made on students vs professional traders. Come on.. most students' net worth is negative, not even talking about moving the market or causing any kind of bubbles - maybe the student loan bubble. 

[radjie]

if there are a lot of amateur traders who are compactly influencing the market price then there is a possibility that some amateur traders are able to create a little bubble on the market price and of course it is not worth the huge influence that the whales play

[Hamphser]

What a load of rubbish.

It's as if they haven't seen the state of the real estate market and how that is the biggest bubble out of anything over the last couple of decades, almost solely driven by institutional investors and developers.

This is a blatant attack on retail investors and their ability to make decisions. The best retail investors are just as capable (if not more so) than biased Wall Street analysts that recommend stocks/funds for their own gain.

Traders and retail investors are highly manipulated but we should stand out from them if we want to be successful and it seems most people in the crypto community is not doing it that is why we are always facing the panic selling whenever the price drops a bit, but we have to get used to it and also it can be an advantage for an individual to buy the assets for cheap prices who are willing to HODL.

When you decided to hold ur asset, u should be aware that hold isn't always safe ur asset but u need to use another strategy. Maybe hold can work if u buy BTC at the lower price since several years ago, but if you buy at the top price, ur asset become shit if u still hold without take average down strategy. For example, I decided to hold without take another way then I got loss so much. My unrealise gain become realise loss, and give me much hit. This is pure my mistake because didn't watch my portofolio as well.

There are instances which cant really be avoided due to unpredictability of the market on where no matter how hard we do try on making out those good positions but due to sudden change of market movements which will really be putting us up on hard situation.

I dont really believe about those Amateur trade causes bubbles, in some part this is true but the market doesnt move out only with small portion
which generally involves lots of people who had been dealing and trading with the market so there would be no exception.

[jrrsparkles]

What a load of rubbish.

It's as if they haven't seen the state of the real estate market and how that is the biggest bubble out of anything over the last couple of decades, almost solely driven by institutional investors and developers.

This is a blatant attack on retail investors and their ability to make decisions. The best retail investors are just as capable (if not more so) than biased Wall Street analysts that recommend stocks/funds for their own gain.

Traders and retail investors are highly manipulated but we should stand out from them if we want to be successful and it seems most people in the crypto community is not doing it that is why we are always facing the panic selling whenever the price drops a bit, but we have to get used to it and also it can be an advantage for an individual to buy the assets for cheap prices who are willing to HODL.

When you decided to hold ur asset, u should be aware that hold isn't always safe ur asset but u need to use another strategy. Maybe hold can work if u buy BTC at the lower price since several years ago, but if you buy at the top price, ur asset become shit if u still hold without take average down strategy. For example, I decided to hold without take another way then I got loss so much. My unrealise gain become realise loss, and give me much hit. This is pure my mistake because didn't watch my portofolio as well.

Let me explain about that, in 2017 the price of BTC went upto 20K and lot of people also bought at that price but very sooner the price started to fall and keep falling like what you mentioned as shit but in 2021 the price went to $60K so even people who bought at the last peak price made 3x profits if they hold it until 2021 which is 300% returns for them which is actually not possible in traditional investment such as stocks,gold, etc.

So now decide that whether you are going to hold it or sell it for loss?