Bitcoin Manipulation – Was There an Ulterior Motive Behind a Potential Raid?

Overview:

We heard over and over in the past day, about market manipulation.  Though we do not disagree with the scenario, it is all part of the risks of being in this or any other market. We wrote about this in our “Market Raid” article.  Yet the question we should be really be asking is, “was Bitcoin the target or the instrument” and why is this important?

Often we are blinded by the obvious and ignore the actual reason for what happened.  Now this is simply speculative, and my personal opinion, but I am not so sure Bitcoin was the target of the market raid, but rather an instrument of, with an ulterior motive to add other instruments.

BTCUSD: Daily

Bitcoin Raid:

We often mention that Bitcoin is the leader of the space and where Bitcoin goes the market goes as well.  In addition one of the reasons we primarily trade Bitcoin is because if a pullback happens, the alt-coins simply get hammered harder.   The other thing to note is Bitcoin has name brand so longer term buyers are eager to buy on any dip, which during a pullback like the one we see above, can result in a subsequent rally to retest the high or at least 50-75% of the bearish swing.

The pullback in Bitcoin off the close on Saturday was around 9% to the close Sunday evening.  Nice retrace but nothing out of the ordinary, and we saw buyers stepping in around the low 3700 area.  Whether this level of support holds only time will tell but so far it has.  Yet looking around many other coins, as expected, took a much harder hit.

LTCUSD Daily

Litecoin:

The pullback in Litecoin was over 15% from Saturday’s close to the close Sunday.  This is over 50% more than Bitcoin’s retrace and if you sold in the 50.0-51.0 area having a buy order in at 44.0-45.0 would have been a descent add to your inventory.  The selloff happened right after Litecoin triggered a long signal as well so it was likely loaded up with long leveraged traders.  Once the stops triggered the dip provided a nice opportunity to buy in the 44.0 area.

ETHUSD Daily

Ethereum:

Here is an interesting chart and we initially had a target of 150.0 where we recommended to our premium members that bought in the 100-125 are to trim off a little, not a lot, but take a little off the top in the event we pullback to our support area.  To be transparent I bought in at 123.50 and mentioned since this was an add back of inventory I sold at 185-195 I am holding for a broader move.

The individual’s exposure really determines whether or not you trim off an every portfolio is different.  Regardless if you wanted to add lower and you missed out or sold at 150.0 and saw the market getting moving higher, you would surely want to buy back lower right?

Again the difference between the close on Saturday and the close on Sunday is over 16% and 50% more than the percentage decline in Bitcoin.

Manipulation:

Now we never know the reason for a market raid, yet one reason may be those with insight or insider information, not available to the public, want to accumulate at lower prices.  The raid the market and have order sitting there waiting to buy the losses of others.  Is it irony or coincidence that almost every chart we looked at hit our support level almost to the dime?  Maybe but also maybe not.  These are typical levels that are on many other investors and trader’s radar as well, they only needed a catalyst to get the market there.

Raid Bitcoin:

Trying to raid Litecoin, Ethereum or EOS simultaneously would be costly and may not work out as well as one might think.  However it is also obvious that the market follows Bitcoin, so if a larger operator wanted to add to his bags of alt-coins because he had information we do not, he only has to raid one instrument, Bitcoin.

Is there any evidence?:

Kinda / sorta, as I mentioned nearly every instrument I looked at hit right at the support level we have had on there for a week.  It was like someone else had those levels too, and had buy orders in place to absorb the sell orders.  We would expect to see some randomness as in some hit the support, some fell through support, etc.

So though we do not have hard evidence, and may never at this point, there is an alternate view that larger operators used Bitcoin as an instrument to short and buy other coins that have been correlating with Bitcoin for months now.

Summary:

Though we mention often we do not care why a market sold off, or blame market manipulation for a trade loss, we should  be aware that manipulation does happen.  Could Bitcoin have been simply an instrument used to buy other alt-coins at better prices, or to slow down the market as it appeared to be getting away?  Who knows, the point is, should you be basing your trading decisions on how Bitcoin is acting or where Bitcoin is positioned? 

We already base our trading decisions on how Bitcoin is acting, where it is relative to support and resistance, but for those of you that don’t, this may be a reason to take a second look at Bitcoin, before entering a more aggressive trade in alt-coins.  Chances are if Bitcoin is raided or manipulated, your trade will feel some pain, and much more of it.

Just food for thought!

Also do not forget our radio show is today at 4PM EST and we our introducing a brand new Team Member who will be issuing more trades in the stock market as we expand with our new site, and offer more trading in other markets.

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4 Responses
  1. jlhequities

    No manipulation. BTC shorts are at major low. Check the level of shorts on Bitfinex each time they were this low, same thing happened every time. Bitmex had 100 million more longs than shorts. Simple explanation is everybody was long and the buyers ran out. Money flow adjusted back to even par.

    1. Andrew Gonci

      Good point, and I am not as familiar with Bitmex, but they do not determine spot, bitfinex, coinbase and others do I thought. Regardless it is a good view on sentiment, and when sentiment is too far one direction, kaplunk!

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