Educational: Breaking misconceptions about market crashs

[aysg76]

I disagree with your speculation. Altcoins have always created sell pressures on bitcoin but never too high to cause any crash of any size. In the most recent case we saw this too, there was a small panic sell but nowhere near $10k drop.

You are missing all the other things that have been going on, the fact that the world economy is in a pretty bad shape these days and many other markets have been crashing too.
You got the irrational part right though but the reason for panic sell was the economy crashing not some shitcoin being dumped.

People only see bitcoin falling and beleive in the reasons they see over the net like the LUNA crash ans 3AC insolvency news but didn't know how it directly affects the prices because they have bitcoins as reserve asset and sell off them in the market to pay off the debts but as you said shitcoins fall don't impact the bitcoin downfall an even after such hits the prices recovered.

It was at the time when we saw the range shifting from $20k below and struggling to rise and see the Tesla news of selling bitcoins didn't have a much impact on the prices going down so bitcoin is independent of these shitcoins load but if some major party or company holding bitcoin got it's position liquidated it could affect the prices adversely but in long run it tends to rise only.

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[wagmi]

~
But it is not enough to crash Bitcoin almost about 10k down.

The sale of BTC80K alone may not have been enough to crash the market but why don't you think of the whale bears that also sold a lot which helped broke vital support?

I'm not sure if it can considered a FUD campaign. And when more people would know about Bitcoin being technically independant from Altcoins, it would not have caused a significant drop.

~ and more Altcoin bad news arrived.

Are you talking about Celsius?

I talked about more DeFi products collapsing.

Remember that you also said this:

~ Recently, Altcoin pressure has resulted in Bitcoin losing value.

Yes, and AFTER it I've said:

Most crashes are not rational and instead, driven by misconceptions and fear.
We need to break such misconceptions to build a stronger and more resistant market.

Recently, Altcoin pressure has resulted in Bitcoin losing value. A huge crash occured, where Bitcoin lost 10k USD.
It was clearly not a rational decision.
Selling people lost much money.
And here's what's important:

 
It was because a Shitcoin collapsed (Terra Luna).
And one more Shitcoin, too (Celsius)
NOT because Bitcoin had issues!

Please, don't take my post out of context, Sir!

Recently, Altcoin pressure has resulted in Bitcoin losing value. A huge crash occured, where Bitcoin lost 10k USD.

I disagree with your speculation.
...
You are missing all the other things that have been going on, the fact that the world economy is in a pretty bad shape these days and many other markets have been crashing too.
You got the irrational part right though but the reason for panic sell was the economy crashing not some shitcoin being dumped.

When Bitcoin crashed, many economic decisions were already priced in.
Corona is priced in long ago, when it was first detected in China and markets collapsed, setting Bitcoin for a short time at under 4k again 2 years ago.
It is now priced in, same a money printer goes brrr.
Putin's war is priced in already and it was a huge market shock how Putin started his war against Ukraine in February. It was a huge war crime when RuZZian military bombed Ukrainian civilians countless times and Putin tries to use his monopoly on gas to surpress states depending on his gas. Putin has caused a huge crisis but it is priced in.
Putin is also trying to facilitate a world hunger crisis where he is trying to starve Africa by bombing Ukraine's wheat exports. Putin is a real war criminal.
It is horrible, what Putin is doing against Ukraine but it is priced in.

Panic sell for economic reason was much earlier. It was recently, because people got fear about Altcoin crashes.
And it was irrational fear about Altcoin crashes.
It does not affect Bitcoin's fundamentals.

It was at the time when we saw the range shifting from $20k below and struggling to rise and see the Tesla news of selling bitcoins didn't have a much impact on the prices going down so bitcoin is independent of these shitcoins load but if some major party or company holding bitcoin got it's position liquidated it could affect the prices adversely but in long run it tends to rise only.

Yes, people need to stop selling Bitcoin. People selling at such low prices will make a LOSS.

[jrrsparkles]

Of course fear acts as the fuel to drive most of the crashes but the fact is it can't be completely resisted when they see the drop all they want to do is to save their portfolio value and also many use this as an opportunity to buy cheaper price than current ones. And its normal in all the markets but when the whales loses their manipulation power which will eventually happen over time what we can expect is to get the volatility range to be lesser not really completely stable to call it as storage of value.

[pooya87]

and see the Tesla news of selling bitcoins didn't have a much impact on the prices going down

The worst part is that people tend to forget cases that don't affect bitcoin and only remember those that do even if they have a tiny effect. For example when bitcoin price was falling some time ago and then Elon started his FUD campaign everyone thought he caused the crash! Then he tried his FUD campaign a couple of more times and it had no effects on the price whatsoever like the most recent one.
But people only remember that first case not the rest!!!

what Putin is doing against Ukraine but it is priced in.

I disagree because the Ukraine war does not affect bitcoin at all. Not even a little bit simply because there is no link between bitcoin and that war.

The effects of this war is on other markets, more specifically the US and EU economy. So when for example the US stock market crashed hard many bitcoiners panicked and started selling their bitcoins irrationally hence causing the bitcoin crash.
That crash has not stopped, for example EU economy is still shrinking whereas bitcoin price stopped dropping and in fact it recovered a little bit. So the only thing that is priced in is the panic sell.

[Z-tight]

But people only remember that first case not the rest!!!

I feel that is done because people want to sell their news, the pressmen sometimes want to sound like investigators and make it feel like they can connect every crash to a particular thing, whether correct or not, the headline: Elon musk causes bitcoin crash is very catchy for them, and business goes on.

That is the reason i feel peole remember those cases more, bacause that is what is prepared for them to read, they also go on to spread it to their acquaintances and on it goes. I feel the most important thing for a bitcoin user is to have knowledge, inaccurate information is easy to spread in the bitcoin market or network, and what follows is panic, but the users that are informed will with ease separate the wheat from the chaff, and do what is right.

[AakZaki]

~snip~

The effects of this war is on other markets, more specifically the US and EU economy. So when for example the US stock market crashed hard many bitcoiners panicked and started selling their bitcoins irrationally hence causing the bitcoin crash.
That crash has not stopped, for example EU economy is still shrinking whereas bitcoin price stopped dropping and in fact it recovered a little bit. So the only thing that is priced in is the panic sell.

I'm a little confused, but if you say there is no connection between the war and the price of Bitcoin it seems to exist even if it is small. I think there has always been a correlation of the state of the world to Bitcoin, in particular the world economy. I think the war also caused the economy in Europe to be slightly disrupted because Russia is the world's No. 2 oil supplier. They stopped supplies to some of Ukraine's allied countries and of course it made the state of the economy unstable. This will affect investors' interest so they prefer non-risk assets. Naturally this will make a market opinion like what you say.

[Cookdata]

Shitcoins are a well-known substitute for people who are always searching for quick profits, they are purchased at low prices in anticipation of a short-term price pump or increase. When this occurs, the majority of them typically collapse or drop, and it takes the strength of the project's product to see the ATH price again, the hype also plays a role in making it to the previous high sometimes. When this crash happens, they do directly or indirectly affect bitcoin especially when there are millions and billions involved, this reminds me of LUNA.

Altcoins are not the only element that contributes to bear market periods, although they do most of the time. Traditional markets such as the SP500 and NASDAQ also have an impact on the movement of Bitcoin, not to mention inflation and recession.

[pooya87]

~
I'm a little confused, but if you say there is no connection between the war and the price of Bitcoin it seems to exist even if it is small. I think there has always been a correlation of the state of the world to Bitcoin, in particular the world economy. I think the war also caused the economy in Europe to be slightly disrupted because Russia is the world's No. 2 oil supplier. They stopped supplies to some of Ukraine's allied countries and of course it made the state of the economy unstable. This will affect investors' interest so they prefer non-risk assets. Naturally this will make a market opinion like what you say.

Well, it is a very weak correlation at best.
If you look at the past couple of years, specifically from the time COVID19 pandemic began. All countries in EU and elsewhere have been printing a lot of money non-stop. Not to mention the damage to the economy as a whole. That inflation had to show its head somewhere.
On top of that countries are dumping US dollar which would weaken it hence the increased inflation in US and the stock market crash.

So far all the economic crisis I mentioned had nothing to do with the war since most of it happened before the war even began.

Then the war happens and the speed of economic crisis increases so EU inflation hits harder, electricity price goes up faster, food prices go up faster, US inflation starts setting new ATH every month, US stock market starts dumping harder than before, ...

So far none of it had anything to do with bitcoin simply because bitcoin is THE hedge against inflation but then people see the US stock market crashing and for some unknown reason they are convinced that they should sell their bitcoins because of that. So they start selling bitcoin and bitcoin crashes!!!

[Russlenat]

But it is not enough to crash Bitcoin almost about 10k down.
<snip>

The point is that an altcoin having fundamental issues is not going to affect Bitcoin much, the sell off could have caused panic as it's somewhat Bitcoin related and can cause panic and fud. There are also other factors that goes into price movements besides what hits the news as headlines.

If bitcoin has an issue and its price drops, expect that all coins will be affected too. But when it comes to altcoins, even if they end up losing their value, that won't create huge effect on bitcoin. Although bitcoin is still prone to such price decline, but always know that bitcoin will eventually recover and target to reach new all time high after that. Maybe the recent price drop for bitcoin is actually more on the reasonable effects due to global economic condition, and crypto market is not the only one affected but as well as with the other market.

[Finestream]

This idea that shitcoins are responsible for Bitcoin crashes is doing more harm than good. It just ruins the credibility of Bitcoin as a currency and a reserve asset. Imagine if USD was crashing because Zimbabwe or Venezuela printed more of their useless fiat currency. But this is essentially what you are saying about Bitcoin. That scams can bring down its price. How it is supposed to replace fiat then?

If this idea will be absorbed by the crypto community, i guess the whole bitcoin society will probably resort into doing wrong decisions that could lead them into visible losses in their investments. Bitcoin continue to show price decline because its the effect brought by bear market plus the negative economic condition of most of the countries. And bitcoin price is definitely affected by all of that, but a simple failure of an altcoin or any shitcoin could never be a sole reason why bitcoin price drops suddenly.