The most stupid dip in Bitcoin's history - and why we can be happy now

[d5000]

Yesterday, in several legs, the Bitcoin price dropped from around 18.500 down to 15.600 $, marking a new low for this bear market.

I call this the most stupid dip in Bitcoin's history (or at least one of the most stupid ones, there may have been others), because the event that triggered it was actually positive.

Basically the price dipped because Binance decided not to buy the struggling FTX exchange.

From the point of view of the "crypto industry", this may have been a negative event. Also, from the point of view of the FTX users. But we, the Bitcoin community, in reality were lucky with that outcome.

If Binance bought FTX, it would have become an enormous, almost monopoly-like, dominant exchange player. Binance would have become the new MtGox. And we all know what's wrong with that. They become single points of failure, and if they fail, then the ecosystem suffers much worse than a day the price tanked 15%.

This is also a good day to remind all Bitcoin users: Never park your coins on exchanges. Use them to buy and sell, and then withdraw them to your own wallet. Not your keys, not your coins! Or, even better, use decentralized exchanges - taking the necessary precautions.

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[Tytanowy Janusz]

You are mostly correct but i have few points:
1- I think that 60% of FTX users will go to trade on binance anyway. Its the best alternative. 20% will leave crypto because of being broke, 20% will chose coinbase, bybit etc. In the case where binance buys FTX i guess that not all FTX users would stay. So positive impact of not buying FTX (bigger decentralization) is not as strong as it may seams.
2- top 2 biggest crypto exchange just go bust. users will be left without founds. Its possible that we will see a "bank run" and collapse of other institutes. I have reduced my liquidity on exchanges by half. Many will do the same. Most likely volumes will go down, volatility. It will take years to recover trust. If binance would help FTX we, as industry, would recover much faster - unless FTX would drag the binance to the bottom with it

[DudeAtWork420]

You are mostly correct but i have few points:
1- I think that 60% of FTX users will go to trade on binance anyway. Its the best alternative. 20% will leave crypto because of being broke, 20% will chose coinbase, bybit etc. In the case where binance buys FTX i guess that not all FTX users would stay. So positive impact of not buying FTX (bigger decentralization) is not as strong as it may seams.
2- top 2 biggest crypto exchange just go bust. users will be left without founds. Its possible that we will see a "bank run" and collapse of other institutes. I have reduced my liquidity on exchanges by half. Many will do the same. Most likely volumes will go down, volatility. It will take years to recover trust. If binance would help FTX we, as industry, would recover much faster - unless FTX would drag the binance to the bottom with it

FTX, Binance its all the same. All of them are not transparent about their reserve assets. With fake volume and market manipulation these exchanges earned millions of dollars but they can not show their full balance sheet to the community. We saw how FTT fall from 22$ to almost 0$. This all happens because of greed and mismanagement. It's time for all those exchange to implement proof of reserve so that same things never happens again.

[rhomelmabini]

You are mostly correct but i have few points:
1- I think that 60% of FTX users will go to trade on binance anyway. Its the best alternative. 20% will leave crypto because of being broke, 20% will chose coinbase, bybit etc. In the case where binance buys FTX i guess that not all FTX users would stay. So positive impact of not buying FTX (bigger decentralization) is not as strong as it may seams.
2- top 2 biggest crypto exchange just go bust. users will be left without founds. Its possible that we will see a "bank run" and collapse of other institutes. I have reduced my liquidity on exchanges by half. Many will do the same. Most likely volumes will go down, volatility. It will take years to recover trust. If binance would help FTX we, as industry, would recover much faster - unless FTX would drag the binance to the bottom with it

FTX, Binance its all the same. All of them are not transparent about their reserve assets. With fake volume and market manipulation these exchanges earned millions of dollars but they can not show their full balance sheet to the community. We saw how FTT fall from 22$ to almost 0$. This all happens because of greed and mismanagement. It's time for all those exchange to implement proof of reserve so that same things never happens again.

Maybe it will hit differently this time now that they made headlines? I mean, CZ itself has proposed that crypto exchanges should adopt Merkle-tree proof-of-reserves and not run on fractional reserves, this will really come to fruition. For sure the government will intervene in this issue maybe not this year but next year. Who would save FTX? I wish this didn't come to an end just like the Lehman Brothers.

[TravelMug]

Yes, CZ is already powerful and there are several individuals who doesn't like what they are seeing in CZ. And just imagine if he has acquired FTX, what will it be like in the future and what if Binance gets hack? Could be more catastrophic than what we are seeing right now.

Many lessons learn, but the number 1 thing that we have been preaching is that you don't left any crypto in any trading exchange. We have seen it in the past and many have lost their money. And again, it's a vicious cycle, just like what we have witnessed wherein millions were lost again in the FTX collapsed.

[Welsh]

If Binance bought FTX, it would have become an enormous, almost monopoly-like, dominant exchange player. Binance would have become the new MtGox. And we all know what's wrong with that. They become single points of failure, and if they fail, then the ecosystem suffers much worse than a day the price tanked 15%.

I imagine they pulled out upon looking at their books. I also imagine that a lot of exchanges are running at a deficit, because they're pumping money out of the company rather than keeping reserves in case of a sudden price change. Unfortunately, the people operating the businesses seem to want to line their own pockets rather than keep the company stable, and prepared for the worst. I'm not sure if it's because running an exchange attracts certain type of people or not.

Anyway, the point being FTX wasn't doing too well obviously, and Binance thought it would be unrecoverable or at the very least too expensive to recover. If they want to expand, they could easily create several sister companies, and operate under a different name on the surface.

[d5000]

1- I think that 60% of FTX users will go to trade on binance anyway.

That is possible, for sure. One could even suspect that Binance has triggered the whole drama with that outcome in mind (they get most of the customers without having to pay a penny), although I read today that their accusations to FTX which triggered the "bank run" two days ago were probably true. So I'm not so sure there.

Anyway I think the whole drama is likely to have a positive consequence which reduces the risk of similar events in the future, which you're mentioning yourself:

I have reduced my liquidity on exchanges by half. Many will do the same.

And I hope many do so. Exchanges should not be used to store coins. It is even good for exchanges if people use them less to "park" coins but to "trade", because a big amount of "parked" coins increases their security/storage costs (cold wallet management etc.) while not increasing their income (mostly from trading and deposit/withdrawal fees).

Of course, some trading strategies need a certain amount of "parked" coins (arbitrage, daytrading ...) but are they really that important for the Bitcoin ecosystem? And high-speed transfers for arbitrage are also possible with Lightning now, although the number of exchanges supporting it is still limited.

It will take years to recover trust. If binance would help FTX we, as industry, would recover much faster - unless FTX would drag the binance to the bottom with it

Trust in whom? The "crypto industry"?

This is for me the most relevant point. The crypto industry should only require minimal trust, as they're only a gateway between Bitcoin and the "fiat world" but not a necessary component of the Bitcoin ecosystem itself. Bitcoin was made to minimize trust at all levels of the financial system. I think, as a consequence of all the hacks and bankruptcies, the exchanges must prepare for a scenario where people have less trust in them, and this is good.

Maybe it will hit differently this time now that they made headlines? I mean, CZ itself has proposed that crypto exchanges should adopt Merkle-tree proof-of-reserves and not run on fractional reserves, this will really come to fruition.

I hope that happens really and wasn't only a "marketing gag" by CZ. Exchanges without solid trust-building mechanisms should be ignored by the users. Learn - or close.

[rhomelmabini]

I hope that happens really and wasn't only a "marketing gag" by CZ. Exchanges without solid trust-building mechanisms should be ignored by the users. Learn - or close.

Yeah, my bad. It's still in speculation but as of the moment they likely are committed to the community as they gave an update regarding on what coins are in their balance sheet.

The fact that FTX rise into the crypto space, it's really hard to imagine, but I guess they managed to have that trust-building mechanism from years they operated. The CEO was sponsoring huge stuffs but we may never know if it all comes from the users fund from the exchange. If this one failed in the course of the week, then I'd say a further capitulation wick is imminent.

[NeuroticFish]

I call this the most stupid dip in Bitcoin's history (or at least one of the most stupid ones, there may have been others), because the event that triggered it was actually positive.

I tend to agree on this. People started panicking for... this, but.. some ideas:
* I agree that Binance not buying FTX is positive
* Binance not buying FTX was actually a normal/expected development
* removing one tumor out of the ecosystem should be a net positive
* I think that some big players decided to take advantage of the uncertain sentiment given by the fall of FTX and so many people probably losing money
* this leg down was expected by some in order to have a similar-to-previous-ones end of crypto winter (I hoped we won't get there)

However, I tend to HOLD and see what happens. We're still in the bear market, whether we like or not, whether we hoped or not that it has ended already.

[Pierre 2]

Yesterday would be example I will point at all my life why I decided to buy Ledger. Hardware wallets make sense. People should admit and stop using exchanges as inventory or wallet for money. No exchange is exploit proof and no exchange is truly honest.
I also agree with OP about current crypto situation. We dipped for tiny except FTT and maybe Solana and it may be like positive problem. (Problem which is gonna help our future positively)
I honestly never wanted Binance to buy FTX.

[adaseb]

But you need to realise the sentiment right after. People lost tons of money with Luna, with 3AC, with Celcius, Voyager, etc. Now with FTX. Many are pissed off at crypto and they are just quitting and getting out. Its not good for adoption.

After this, even if prices don't dip. The retail adoption will be gone. They will most likely go back to stocks since at least with a stock broker, you can lose money on your investments BUT never on any cash you hold on the exchange. With crypto people lost money with investments which went down 90% and they lost 100% of their deposits which were in cash.

That and there is going to be more regulation from governments after this mess.

[el kaka22]

It is not the most stupid one, I can tell you which one is the most stupid dip ever. Back in November 2018 or so, there was a war between BCH and Craig Wright. The creators of Bitcoin cash, roger ver and jihan wu if I am not wrong, wanted to keep the power of BCH in their hands, they wanted to control it, Craig Wright wanted to take the control of it, and he had a ton of bitcoins to attack it as well.

So, he sold tens of thousands of bitcoins, got a lot of money for it, paid a bunch of miners, and tried to take the control of it. He failed, but that sell of thousands of bitcoins caused it to drop even harder, and this was 2018 so it was already bear market. That one was the worst dip, and made no sense.

[NotATether]

But you need to realise the sentiment right after. People lost tons of money with Luna, with 3AC, with Celcius, Voyager, etc. Now with FTX. Many are pissed off at crypto and they are just quitting and getting out. Its not good for adoption.

Whether they like it or not, it's not crypto's fault that maniacs are throwing money and screwing around markets.

Really, whenever something goes wrong, everybody just goes and blames the developers:

- Algorithms are promoting biased stuff? Developers' fault
- AI discrimination? Developers' fault
- Some crypto service crashes? Crypto's fault (which is just a sneaky way of saying Developers' fault because they built the cryptos in the first place)
- etc.....

As industries become more centralized, so does blame. We find a small group of people being hit with a large amount of it.


Crypto was not created to make you rich. It was created as a freedom currency. Stop here for a moment and appreciate that guys.

People who come in here looking for wealth return disappointed, as in 99% of other industries.

[ginsan]

Yesterday, in several legs, the Bitcoin price dropped from around 18.500 down to 15.600 $, marking a new low for this bear market.

I call this the most stupid dip in Bitcoin's history (or at least one of the most stupid ones, there may have been others), because the event that triggered it was actually positive.

Basically the price dipped because Binance decided not to buy the struggling FTX exchange.

From the point of view of the "crypto industry", this may have been a negative event. Also, from the point of view of the FTX users. But we, the Bitcoin community, in reality were lucky with that outcome.

If Binance bought FTX, it would have become an enormous, almost monopoly-like, dominant exchange player. Binance would have become the new MtGox. And we all know what's wrong with that. They become single points of failure, and if they fail, then the ecosystem suffers much worse than a day the price tanked 15%.

This is also a good day to remind all Bitcoin users: Never park your coins on exchanges. Use them to buy and sell, and then withdraw them to your own wallet. Not your keys, not your coins! Or, even better, use decentralized exchanges - taking the necessary precautions.

I don't think it's a stupid drop but rather it's a business setback in the cryptocurrency world where nearly 403k traders were liquidated in yesterday decline. We know that bad news and negative things that happen in crypto can have a big impact on the decline in bitcoin and altcoin prices. So I think the big setback was when cz published on twitter where he was going to sell the Ftt assets he received from ftx for their partners and this is the main problem for investors because they are worried that this round of decline will be worse than the terra luna incident and this  came true yesterday where Btc plummeted to a new low of the year.

[ShowOff]

Crypto was not created to make you rich. It was created as a freedom currency. Stop here for a moment and appreciate that guys.

I really thought of something like this, but as long as this crypto is trading at a price that never stabilizes then there is hope of making its investors rich. People are not wrong about wanting to get rich on crypto investing, but it has to be worth the risk so they really understand that if they can be rich they can also be poor.

To me crypto is a currency, but also a tradable asset. I can get freedom from that but also have to comply with government regulations. This can be interpreted differently for countries that legalize crypto as a means of payment, but I have to comply with the rules that apply in my country by not using crypto as a means of payment.

[STT]

Organic growth is probably best but Im not sure the weakness is over despite the good recovery today.  I agree the reasoning to sell off was not especially valid but happened anyway and so now I expect we will have to explore these prices some more to be sure its established as a low.  However anything can happen, right this moment we are trading higher then the 2 day average pricing so thats pretty full positive price action to occur so fast.   Also the price now is about where the old support was, it might be a ceiling not sure.

[taufik123]

This incident became a drama between CZ and SBF between Binance and FTX, and affected the bitcoin market very drastically.

At first, Binance revealed that it was going to buy FTX and this looked good enough to save FTX from being destroyed, but a few days later Binance canceled to acquire FTX due to recent reports of mishandled customer funds and alleged US agency investigations.

Being a drama of both parties but influential on the bitcoin market, became one of the most stupid bitcoin declines in history.

Even though CZ previously always posted motivational words on his Twitter but when this drama appeared CZ seemed to play this drama well. when what CZ tweets will have an impact on the crypto market.

another impact of this event was a drastic drop in coins and tokens on the Alameda Research Portfolio, such as SOLANA etc.
Alameda research website also cannot be accessed with Private Site status.

[philipma1957]

This is about unbacked stable coins pegged to the US dollar.

Has to be stopped. Or someone just prints a new stable coin loads up on btc and then kills off the exchange.

Stables coins along with quite a few Pos coins are bad news. nuff said.

[d5000]

People lost tons of money with Luna, with 3AC, with Celcius, Voyager, etc. Now with FTX. Many are pissed off at crypto and they are just quitting and getting out. Its not good for adoption.

That is true partially. Some will leave. But those who stay, and I think that will be the immense majority, will learn how to "do crypto right". As we older folks learned when MtGox collapsed. I had never much money there, but was lucky to withdraw my last few dozens of dollars just before withdraws were cancelled. Now I don't store larger sums anymore at any exchange.

But I didn't refer so much to the first dip (22000 -> 18000) which occurred when rumours emerged that FTX was in problems. This dip was understandable and "rational", because it showed that at least some entities in the crypto industry sector didn't as well as they admitted (remember that FTX had a contract with a Formula 1 team, other sports teams etc., giving the impression that it was a big, established and trustworthy player).

The "stupid" part for me was when the price recovered when Binance was about to buy FTX (which would have been very bad for the crypto sector, as I wrote above) and then dipped again to new lows when this acquisition was cancelled.

By the way, it's interesting that the price didn't dip even deeper after insolvency was confirmed. That is indicating, for me, that the sentiment hit wasn't as strong as initially feared.

That and there is going to be more regulation from governments after this mess.

Regulation, or tighter observation, for exchanges, probably (like Gensler already announced). Which isn't bad for the crypto industry. Maybe also for DeFi (although more due to the Luna mess half a year ago). But Bitcoin itself isn't really affected by this - it was only the fault of a management of a for-profit entity which didn't do their homework right.

[hatshepsut93]

For years people who criticized altcoins were branded as "maximalists" or "extremists". Time has proven that they were right, that the altcoin ecosystem, including exchanges, is unsustainable and does not produce anything useful. Bitcoiners should double down on drawing the line between "crypto" and Bitcoin. We need to have exchanges that are purely Bitcoin exchanges, they would only deal with Bitcoin and fiat, and not even the stablecoins will be listed. We should be criticizing "crypto" instead of saying "not all crypto is bad". Because it's only Bitcoin that is solid.