Bitcoin Sell-off — Panic or Planned?


The recent massive BTC sell-off that led BTC prices to a new low this year (below USD 3,500) brought about panic across the market. As the market reels in shock, let’s take a step back and consider the possible explanations for the Bitcoin meltdown. Last week, we spoke about how SEC’s crackdown on the ICOs market might have played a role in the massive sell-off. This week, we offer you a different perspective on the possible driving force behind the recent bearish crypto-environment.

According to Seeking Cryptos, the Wyckoff Market Engineering theory is a possible explanation for the recent selloff.

Wyckoff What?

Richard Wyckoff, a legendary trader back in the 1930s, wrote a manifesto on how huge operators engineer trades and force weak hands out of the market.

Wyckoff’s 1931 book, Method of Trading and Investing in Stocks — A Course of instruction in Stock Market Science and Technique, quickly earned Wyckoff a cult following on Wall Street. For a detailed walk-through of the Wyckoff’s method, read here.

The key points of the Wyckoff method have been well-summarised by Seeking Crypto. We fully quote from Seeking Cryptos:

  1. “They operate in stocks or commodities which they can move best”. What easier market is there to manipulate or engineer trades than the crypto space? It is unregulated; there are no rules or oversight governing bodies. This is the perfect market for engineering trades.
  2. “He prefers to do this when the market is weak, dull, inactive and depressed.” After months of watching paint dry in a boring market, Bitcoin surely meets the requirement of weak, dull, inactive and depressed. Note how many analysts were becoming undecided in direction? Were getting ready or already threw in the towel?
  3. “When he wishes to accumulate a line, he raids the market for that stock”. Is this what is happening, and are they any clues?

In short, analysts and traders are speculating that the recent sell-off event was a calculated and planned move to disrupt the market through market engineering.

What now?

Managing emotion in this volatile crypto market is key. As the world has learnt from major financial crisis over the past decades (1987 market crash, the 2001 dotcom bubble, the 2008 financial crisis), markets rebound and recover. Adam Freedman, chief investment officer at CircleBlack, wrote in a report “results have suggested that for investors with a long time horizon, the downside of even a worst-case scenario isn’t that dire”.

With major educational institutional endowment funds from Harvard, Standford and MIT investing in crypto funds and financial institutions like Fidelity investing resources in the Blockchain and Cryptospace, the future of Blockchain and Cryptocurrency are really less dull than what it appears to be now.

As Seeking Cryptos put it, investing in crypto “is not an easy discipline to master. It takes time, patience, the ability to learn, and most of all True Grit!”

Amidst this crypto-market panic, stay calm, analyze and carefully evaluate your next move until the market stabilizes.

What are your thoughts on the recent market movements? Share with us your comments!

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