Bitcoin was… being Bitcoin over the August long weekend (in Canada). It rose sharply over the course oåf the week (+$2,200) and even into Saturday, only to drop in one giant red candle (-$800) in less than ten minutes.
I’ve been in the space now for seven years and this type of movement didn’t strike me as odd, in fact I think this type of movement shows us two very important things about Bitcoin:
- The past can tell the future
- The existing financial barriers can impact short term pricing
We are aiming to make Bitcoin easy to buy and sell for many reasons. Bitcoin allows the average consumer to take power over their finances and ensure they are not susceptible to centralized-banking failure. We aim to educate and expose as many Canadians as possible to enable the dream of true financial freedom.
At this point I’m going to assume we all know what the Bitcoin Halving is, but if not please, educate yo’self. I am of the belief that a Bitcoin’s price is related to the halving, just not in the way the media and some “hodlers” think. As you can see in the image taken here we are on our third halving cycle. This is a pretty small sample size, but we need to start somewhere.
In the far left (the red column) we see Bitcoin rising sharply in mid 2011 only to crash shortly after in late 2011/early 2012. This data is virtually irrelevant because we didn’t really see any price discovery until halfway through this mining cycle. Though, as a side note, pretty incredible to see a commodity go from inception to parity with USD in less than two years!
The second column (the blue column) shows Bitcoin reaching it’s previous ATH (all time high) shortly after the first halving (~6 months). We see a significant increase throughout the first half of the halving cycle with a sharp decline during the mid to latter half of the halving cycle and finally seeing some sort of “recovery” into the halving.
The third column (the green column) shows Bitcoin reaching it’s previous ATH shortly after the halving (~8 months — do you see a pattern?). We then see a significant increase throughout the first half of the halving cycle with a sharp decline during the mid to latter half of the halving cycle (that part was literally copy/pasted from the last paragraph) and recently have started to trend upwards again. We are still in this halving cycle and will have to see how it plays out.
I want to draw your attention to the first fifth of both the blue and green columns. You will see a sharp rise, followed by a decline (sound familiar?) and then another rise and another drop (do note that the green box looks way less dramatic because the scale is from $1,000 — $10k where the blue is ranging from $100 — $1,000).
Based on what we’ve seen in the past, it could be argued that we are in the first rise/drop for this halving cycle. That means that over the next few weeks/months we should see bitcoin bounce around the levels we are at now and then rise sharply followed by a quick drop. This was interesting to see over the weekend, but it wasn’t the only realization I came to about this explosive market.
The existing financial barriers can impact short term pricing.
itcoin rose sharply throughout the week. People were transacting during typical banking periods where money flows relatively smooth (wire transfers credited, cheques deposited, etc). We then saw an incredible Bearwhale come in on a Saturday and destroy all of Bitcoin’s hard work upward in a matter of minutes. It had me wondering if exchange accounts were left without any funding to buy into the bearwhale (making it less painful).
We saw a much larger showcase of a Bearwhale’s capabilities in October 2014. October 6, 2014. Monday October 6, 2014. Monday. The financial system was open. The bearwhale in 2014 opened a 30,000BTC sell order @ $300 ($9,000,000 value) and the wall sat there for around six hours before the sell wall was eaten up and prices moved upwards again.
The price of Bitcoin dropped to the wall at $300, there were minor fluctuations between $290 and $300 before exploding back up original levels. The fact that this bearwhale dumped his stash on a Monday made the difference. The banks were open and users were able to fund their accounts and buy into the wall.
On Saturday when we watched prices collapse from $12,000 to $11,000 in 10 minutes we didn’t have that option. It’s likely that due to the sharp rise in prices previously there were quite a few users that had already FOMO’d in and built into the pump so when the dump came there was no more fiat in the exchanges to buy into the bears. We saw trade volume shrink to ~50% of what it was during the week and things went on pause. Until August 3rd (you guessed it, a Monday) where US banks opened up, trading volume increased and with it, so did the price.
All this to say, we were once again handcuffed by a custodial system. The wonderful thing about Bitcoin is that it is 24/7, 365 days/year. I, personally, have made trades every single day of the year. It’s wonderful and in my opinion, it’s necessary. We live in a borderless world, with borderless communications and our archaic monetary system puts artificial borders on our money. Protecting Bitcoin from Bearwhales should not be reliant on banker’s hours.