The reasons for the BTC debacle

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27.11.2020 – Special Report. Oops, I did it again – just like 2017, Bitcoin rushes away first, only to crash. This may have created an extremely bearish double top. Let’s wait and see. But what was going on here? China was actually behind it. But the US Federal Reserve is apparently also sharpening its knives. We shed light on the background – and warn again that the masters of money will sooner or later eliminate e-foreign currencies.

Bloody nose for BTC bulls

That’s the way to do it: At first Bitcoin could hardly run with all its strength – and began a brilliant race to catch up from the Corona lows to reach the summit. On Wednesday, a Bitcoin still cost a good $19,500 – the highest price in three years. And then the bitter minus. But why?

The Fomo effect

The resetting of the course repeats a familiar pattern – because it is by no means the first time that the course rises rapidly and then collapses. “This means that a financial bubble regularly forms in cryptocurrencies, it bursts, then a new bubble forms”. And then the paper quotes Brian Kelly, founder and CEO of BKCM LLC, an investment firm specialising in e-foreign currencies. “Many investors are driven by the fear that they might miss something. They call this the fomo effect, which is the abbreviation for the English term (“the fear of missing out”).” It’s all psychology

Family Offices and Paypal

Two developments have driven the price for crypto currencies in particular: On the one hand, professional investors are increasingly entering the market. Due to the low interest rates, pension funds and family offices, which invest the money of wealthy families, have also been buying. On the other hand, according to the “Tagesspiegel”, the US payment service provider Paypal pushed the trade in crypto currencies, as customers in the USA have recently been able to buy and sell Bitcoin, Bitcoin Cash, Ether and Litecoin via their Paypal account. We see it the same way.

Higher margin costs

But that does not explain the short-term sell-off. The psychological bubble explanation is too meagre for us. CoinTelegraph.com also let Kelly have her say. He referred to the recent sharp increase in demand in the cryptocurrency market – which has completely dried up supply. In other words, buyers would have been disappointed and withdrawn. Furthermore, the cost of the loan would have increased and in the end, small investors would have been holding the hot potato: “The last one is that we are starting to see retail come into this market and you’re starting to see the interest rates that it charges on margin going much higher.

Cash register at the top

Apparently, big addresses have also made it to the top cash register. William Suberg of CoinTelegraph pointed out that investors had sold high volumes of BTC on the various stock exchanges just under $20,000. “All Exchanges Inflow Mean increased a few hours ago. It indicates that whales, relatively speaking, deposited $BTC to exchanges,” Ki Young Ju from the analysis company CryptoQuant assisted on Twitter. By the way, he believes that BTC will crack the 20K in the next few days.

Heavy outflows from China via OKEX

And then Ki Young Ju pointed out exactly the factor we had recently warned of at this point: China was behind the crash. You remember: in October, the People’s Bank of China (PBOC) banned the private issuance of digital currencies. And the OKEX exchange, which is registered in Malta, was closed without further ado. Ki Young Ju pointed out that OKEX now allowed withdrawals again. With severe consequences: “BTC flows from OKEx to all other exchanges hit 493 BTC at that time,” he reported on Twitter. And further: “83% of total outflows went to non-exchange wallets like custody. So BTC disappeared from the market in private pockets. So it looks as if frightened investors in the Middle Kingdom were quick to cash in before the communists froze trading again.

Rumours about US regulation

This was accompanied by similar rumours from America, as reported by Brian Armstrong, CEO of Coinbase. According to these rumours, the USA is planning to regulate so-called “self-hosted cryptocurrency wallets”, i.e. software programmes that serve as small banks. Armstrong commented: “If this crypto regulation comes out, it would be a terrible legacy and have long standing negative impacts for the U.S. In the early days of the internet there were people who called for it to be regulated like the phone companies. Thank goodness they didn’t.”

Thanksgiving dries up demand

In conclusion, it should be noted that trade in the USA was already largely dormant before Thanksgiving and that this demand therefore fell away – many Americans traditionally make their way to their families in advance.
Our conclusion: The Vola at the Cryptos should remain with us – you must be careful. We have repeatedly pointed out that the world’s central banks will not accept an uncontrollable reserve currency. So keep an eye on news of this kind. The Bernstein Bank wishes successful trades and investments!


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