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Ask HN: Why is Bitcoin crashing massively right now?

35 points by throwaway713 6y ago

Huge volume of trading activity and a crash from $9.5k USD to $8.5k USD in the past 30 minutes: https://www.coindesk.com/price/bitcoin

thexa4 6y ago
https://www.teletrader.com/bitcoin-drops-15-trades-close-to-8-000/news/details/52111275?internal=1 https://www.teletrader.com/bitcoin-drops-15-trades-close-to-... This website suggests it's due to bitcoin halving the block reward soon.
- kerkeslager 6y ago
  1. That link does not suggest a causal link between the halving and the drop in price. 2. If it did suggest that, it would directly oppose the law of supply and demand--a reduction in the rate of increase in supply should increase price, not lower it.
shiado 6y ago
Somebody using the leverage exchanges (>100x margin exchanges) are liquidating the leveraged longs over the weekend after a several week long run up where people built large long positions. After a 10k close on Friday expect it to gap up to 10k Sunday night forming a reverse BART and making the players behind this move much wealthier.
- marktangotango 6y ago
  Which exchanges are these? Are they generally btc or ?
spats1990 6y ago
""The halving is coming"" but markets are anti-inductive. https://www.lesswrong.com/posts/h24JGbmweNpWZfBkM/markets-are-anti-inductive https://www.lesswrong.com/posts/h24JGbmweNpWZfBkM/markets-ar... (I think. I can't actually say I fully understand this piece, but it seems to make a bit more sense with each reread.)
- treyfitty 6y ago
  I like this article and hate it at the same time. It posits a proposition quite simply, but there's enough going over my head that I can't truly grasp what the author is saying. For example: "Let's say you see me flipping a coin. It is not necessarily a fair coin. It's a biased coin, and you don't know the bias. I flip the coin nine times, and the coin comes up "heads" each time. I flip the coin a tenth time. What is the probability that it comes up heads? If you answered "ten-elevenths, by Laplace's Rule of Succession", you are a fine scientist in ordinary environments, but you will lose money in finance." Why is it 10/11? If we are to take the probability by induction (as the author points out shouldn't be done), it would be 9/9, no? For a non-biased coin case, taking the limit of [h/(n)] as n -> inf and where h = 0.5n would be 50%. If we have observed 9 heads in 9 flips, doesn't induction dictate the we should expect the next flip to be heads? I'm not saying I'm right... but I'd like to correct my gap in logic.
  - sharemywin 6y ago
    https://jonathanweisberg.org/post/inductive-logic-2/ https://jonathanweisberg.org/post/inductive-logic-2/ (K+1)/(N+2)
    - treyfitty 6y ago
      Amazing, thanks.
  - kerkeslager 6y ago
    Well, did you look up Laplace's Rule of Succession? https://en.wikipedia.org/wiki/Rule_of_succession https://en.wikipedia.org/wiki/Rule_of_succession I'll try my hand at explaining: Let's say there is a coin you have never seen flipped. You know it might be an unfair coin, but you don't know which side it favors. All you know is that there are two possibilities: heads or tails. Intuitively, we know at this point that the best information we have is gives us a 1 in 2 chance of flipping heads. Laplace represents this intuition by representing what we know without having ever flipped the coin as pseudexperiments. In other words, we have two implied experiments, one in which heads was flipped, and one in which tails was flipped. You flip the coin once, and get heads. But it would be extremely premature to assume at this point that you have a coin with a probability 1 of getting heads just because that's the result you've seen. Even a completely fair coin might have this result. Knowing that a fair coin might have this result, you can still include your pseudo experiments, and treat it as if we have 3 experiments: 1 pseudo experiment with result heads, 1 pseudo experiment with result tails, and 1 real experiment with result heads. So we now say the chances of flipping heads again are 2 in 3. After 2 heads, we have HTHH, so we say 3 in 4. After 3 heads, we have HTHHH, so we way, 4 in 5. After 5 heads we have HTHHHHH, so we say 6 in 7. And so on until 9 heads we say 10 in 11. > Why is it 10/11? If we are to take the probability by induction (as the author points out shouldn't be done), it would be 9/9, no? No. With a completely fair coin, there's a 1 in 512 chance that you would get heads 9 times in a row, so you can't completely discount that possibility. The derivation proving that Laplace's method is equivalent to the sum of all the probabilities of having all the possible coins and flipping 9 heads with them is complicated, and I don't think I can do a better job of explaining that than the Wikipedia article did.
Kevin578 6y ago
Bitcoin recently pumped from ~$7k to near $10k in a few days. Of course, after a quick pump comes what?
- clouddrover 6y ago
  > Of course, after a quick pump comes what? Pregnancy.
  - beckingz 6y ago
    And then the dump. Pump and dump.
Proven 6y ago
Because retail investor muppets are soon going to realize that stories about the price going up after halving are complete nonsense. Whales are exiting now, muppets will follow.
Analemma_ 6y ago
Everyone here is just making random guesses. The truth is that Bitcoin is an asset backed by nothing but speculation, so wild price swings with no legible cause are completely normal.
- gas9S9zw3P9c 6y ago
  Exactly. This thread describes perfectly how humans love making up stories in their own mind to get the illusion they "understand" something. There's nothing to understand here, and no single simple reason, except that a large volume of BTC was sold.
- z3rgl1ng 6y ago
  Careful now, someone’s going to lecture you about how you “don’t understand the nature of money” and how “hyperinflation of bitcoin cannot occur” if you keep up that kind of talk. Jesus Christ I can’t wait until we can stop wasting time, money, and oxygen on this stuff.
treyfitty 6y ago
It looks eerily similar to what happened to the stock ticker MVIS. 2 days before a major event/earnings call (though, the earnings call was pure speculation), an extremely large single transaction took place that elicited stop losses for those with limits placed, exacerbating the fall. Redditors like to think this is a manipulation tactic to incite a plummet in price to buy in at a much cheaper price and ride a slow, gradual wave up before the actual event happens. https://twitter.com/whale_alert/status/1259258437831188482?s=20 https://twitter.com/whale_alert/status/1259258437831188482?s...
koalala 6y ago
volatility always increases near halving events.
mirimir 6y ago
What's interesting is that it got back to ~$10K so fast after the crash to ~$5K in mid March.
- WheelsAtLarge 6y ago
  If you have enough BTC you can move the market. I bet there a few teams out there coordinating buy and sell points.
  - z3rgl1ng 6y ago
    Indeed. https://www.google.com/amp/s/www.bloomberg.com/amp/news/articles/2019-11-04/lone-bitcoin-whale-likely-fueled-2017-price-surge-study-says https://www.google.com/amp/s/www.bloomberg.com/amp/news/arti...
unnouinceput 6y ago
"...crash from $9.5k USD to $8.5k USD in the past 30 minutes..." what's this? quality bait? BTC was up and down all the time, this is normal. Say OP, do you have bitcoins? Because it seems to me you're trying to stir something
- adamhearn 6y ago
  This large of a move in the BTC market recently is much more uncommon.
  - wolco 6y ago
    It sounds like a big holder moving out and probably into the stock market which should be hot soon now that people are going back.
- WheelsAtLarge 6y ago
  OP, is probably a new investor having to deal with the ups and downs of Bitcoin. The volatility hurts when you have real money on the line.
gitgud 6y ago
Correct me if I'm wrong but there's many reasons: - It's an unregulated market, so there's nothing preventing wealthy actors from buying up tonnes and artificially increasing the price, e.g: "pump n dump". - It's inherently speculative and has no real use besides investing and unregulated money exchange. - It's a global market, people from all over the world have access to the market with little overhead, making it volatile.
- mettamage 6y ago
  > It's inherently speculative and has no real use besides investing and unregulated money exchange. How about sending cash? You can do that with a bank account. But what if you can't? 1.7 billion people are unbanked and some of them do have access to computers. There are situations where cryptocurrencies are currently the only solution. Sure, not for you, or for me. But definitely for a large group in the world that we don't know much about, because we don't live their lives. Edit: the more I reread my reply the more it fits "unregulated money exchange". But I'd like to argue that such a thing is a real use case. And by trivializing it you're not allowing yourself to understand it with minimal bias.
  - notahacker 6y ago
    > But what if you can't? 1.7 billion people are unbanked and some of them do have access to computers. And absolutely none of them are or should be storing their limited assets into something they can't change into spendable cash in the local economy without access to a bank account [even without taking into account volatility etc]. Regulated money transfers already serve this population much better for sending money long distance because they get cash at the other end. No matter how hard newly-minted foreign millionaires try to enlist them in the dump phase of their money-printing scheme, people in the developing world don't have a need for computer based tokens with volatile notional value which are not only not accepted by people in their local economy but also completely unintelligible to them The real demand for unregulated money exchange is of course unlawful transactions, and serious crime like extortion undoubtedly represents several orders of magnitude more volume in the BTC economy than serving the unbanked.
throwaway743 6y ago
I'm assuming you bought high? Learn to read trading indicators. You'd see that it was massively over bought and bound for a bit of a correction. Also, if you think this is bad... you haven't been in the shit yet/must be new to this market.
- mekster 6y ago
  What is the indicator that made you think it was massively over bought at $9.5k?
  - throwaway743 6y ago
    RSI(28) started peaking on the daily chart. Weekly and monthly charts are showing room to move either way. Stochastic RSI is at mid range on weekly, moving upwards, and has yet to cross over. Same for monthly, except it's moving downwards. Daily was pretty oversold, but longer term looks to be brighter.
decentralised 6y ago
You're new to this :-) Look all cryptos are extremely volatile because the real market liquidity is an order of magnitude less than most people think it is, and the way automated market makers work force all exchanges to keep their prices "in sync" to avoid arbitrage like we had in the early days when it was possible to buy for 50$ in one exchange and sell for 100$ in another.. On the plus side, atm BTC is up ~8% in the last year and about ~22% since the beginning of the month. Source: me a blockchain dev, former CTO of a crypto exchange that raised 30M in an ICO.
- random_moonwalk 6y ago
  I'm curious how the automated market makers keep the prices in sync across exchanges, any more detail you can offer/links to further reading?
  - decentralised 6y ago
    Most of what I know I picked up by looking at AMM vendor websites and papers as well as attending industry conferences and talking with the people there.
- tuesday20 6y ago
  A bit off topic - is it worth learning blockchain tech? Is it a viable career? If yes, where should be start - btc, eth..? Or something else?
  - rini17 6y ago
    It is certainly useful to learn enough to dispel the bull "X will be better with blockchain".
    - mettamage 6y ago
      I second this. Blockchain is still an amazing technology though. I think the general concept is even way cooler (blockchain is, I think, an implementation detail). The concept is: decentralized databases When should you have that? Well, one example: whenever you need a database, and a centralized database is politically or socially impossible. Fun fact: bitcoin is a better currency than any currency that is undergoing hyperinflation right now. Some of those places also can't have centralized databases.
s1t5 6y ago
Only midlly related - for the past couple of years (since the crash of early 2018) following the crypto markets has been incredibly boring because of how highly correlated all the coins have been. Just have a look at coinmarketcap - the line charts are nearly identical.

35 points by throwaway713 6y ago

Huge volume of trading activity and a crash from $9.5k USD to $8.5k USD in the past 30 minutes: https://www.coindesk.com/price/bitcoin

thexa4 6y ago

https://www.teletrader.com/bitcoin-drops-15-trades-close-to-8-000/news/details/52111275?internal=1 https://www.teletrader.com/bitcoin-drops-15-trades-close-to-... This website suggests it's due to bitcoin halving the block reward soon.

kerkeslager 6y ago
1. That link does not suggest a causal link between the halving and the drop in price. 2. If it did suggest that, it would directly oppose the law of supply and demand--a reduction in the rate of increase in supply should increase price, not lower it.

shiado 6y ago

Somebody using the leverage exchanges (>100x margin exchanges) are liquidating the leveraged longs over the weekend after a several week long run up where people built large long positions. After a 10k close on Friday expect it to gap up to 10k Sunday night forming a reverse BART and making the players behind this move much wealthier.

marktangotango 6y ago
Which exchanges are these? Are they generally btc or ?

spats1990 6y ago

""The halving is coming"" but markets are anti-inductive. https://www.lesswrong.com/posts/h24JGbmweNpWZfBkM/markets-are-anti-inductive https://www.lesswrong.com/posts/h24JGbmweNpWZfBkM/markets-ar... (I think. I can't actually say I fully understand this piece, but it seems to make a bit more sense with each reread.)

treyfitty 6y ago
I like this article and hate it at the same time. It posits a proposition quite simply, but there's enough going over my head that I can't truly grasp what the author is saying. For example: "Let's say you see me flipping a coin. It is not necessarily a fair coin. It's a biased coin, and you don't know the bias. I flip the coin nine times, and the coin comes up "heads" each time. I flip the coin a tenth time. What is the probability that it comes up heads? If you answered "ten-elevenths, by Laplace's Rule of Succession", you are a fine scientist in ordinary environments, but you will lose money in finance." Why is it 10/11? If we are to take the probability by induction (as the author points out shouldn't be done), it would be 9/9, no? For a non-biased coin case, taking the limit of [h/(n)] as n -> inf and where h = 0.5n would be 50%. If we have observed 9 heads in 9 flips, doesn't induction dictate the we should expect the next flip to be heads? I'm not saying I'm right... but I'd like to correct my gap in logic.
- sharemywin 6y ago
  https://jonathanweisberg.org/post/inductive-logic-2/ https://jonathanweisberg.org/post/inductive-logic-2/ (K+1)/(N+2)
  - treyfitty 6y ago
    Amazing, thanks.
- kerkeslager 6y ago
  Well, did you look up Laplace's Rule of Succession? https://en.wikipedia.org/wiki/Rule_of_succession https://en.wikipedia.org/wiki/Rule_of_succession I'll try my hand at explaining: Let's say there is a coin you have never seen flipped. You know it might be an unfair coin, but you don't know which side it favors. All you know is that there are two possibilities: heads or tails. Intuitively, we know at this point that the best information we have is gives us a 1 in 2 chance of flipping heads. Laplace represents this intuition by representing what we know without having ever flipped the coin as pseudexperiments. In other words, we have two implied experiments, one in which heads was flipped, and one in which tails was flipped. You flip the coin once, and get heads. But it would be extremely premature to assume at this point that you have a coin with a probability 1 of getting heads just because that's the result you've seen. Even a completely fair coin might have this result. Knowing that a fair coin might have this result, you can still include your pseudo experiments, and treat it as if we have 3 experiments: 1 pseudo experiment with result heads, 1 pseudo experiment with result tails, and 1 real experiment with result heads. So we now say the chances of flipping heads again are 2 in 3. After 2 heads, we have HTHH, so we say 3 in 4. After 3 heads, we have HTHHH, so we way, 4 in 5. After 5 heads we have HTHHHHH, so we say 6 in 7. And so on until 9 heads we say 10 in 11. > Why is it 10/11? If we are to take the probability by induction (as the author points out shouldn't be done), it would be 9/9, no? No. With a completely fair coin, there's a 1 in 512 chance that you would get heads 9 times in a row, so you can't completely discount that possibility. The derivation proving that Laplace's method is equivalent to the sum of all the probabilities of having all the possible coins and flipping 9 heads with them is complicated, and I don't think I can do a better job of explaining that than the Wikipedia article did.

Kevin578 6y ago

Bitcoin recently pumped from ~$7k to near $10k in a few days. Of course, after a quick pump comes what?

clouddrover 6y ago
> Of course, after a quick pump comes what? Pregnancy.
- beckingz 6y ago
  And then the dump. Pump and dump.

Proven 6y ago

Because retail investor muppets are soon going to realize that stories about the price going up after halving are complete nonsense. Whales are exiting now, muppets will follow.

Analemma_ 6y ago

Everyone here is just making random guesses. The truth is that Bitcoin is an asset backed by nothing but speculation, so wild price swings with no legible cause are completely normal.

gas9S9zw3P9c 6y ago
Exactly. This thread describes perfectly how humans love making up stories in their own mind to get the illusion they "understand" something. There's nothing to understand here, and no single simple reason, except that a large volume of BTC was sold.
z3rgl1ng 6y ago
Careful now, someone’s going to lecture you about how you “don’t understand the nature of money” and how “hyperinflation of bitcoin cannot occur” if you keep up that kind of talk. Jesus Christ I can’t wait until we can stop wasting time, money, and oxygen on this stuff.

treyfitty 6y ago

It looks eerily similar to what happened to the stock ticker MVIS. 2 days before a major event/earnings call (though, the earnings call was pure speculation), an extremely large single transaction took place that elicited stop losses for those with limits placed, exacerbating the fall. Redditors like to think this is a manipulation tactic to incite a plummet in price to buy in at a much cheaper price and ride a slow, gradual wave up before the actual event happens. https://twitter.com/whale_alert/status/1259258437831188482?s=20 https://twitter.com/whale_alert/status/1259258437831188482?s...

koalala 6y ago

volatility always increases near halving events.

mirimir 6y ago

What's interesting is that it got back to ~$10K so fast after the crash to ~$5K in mid March.

WheelsAtLarge 6y ago
If you have enough BTC you can move the market. I bet there a few teams out there coordinating buy and sell points.
- z3rgl1ng 6y ago
  Indeed. https://www.google.com/amp/s/www.bloomberg.com/amp/news/articles/2019-11-04/lone-bitcoin-whale-likely-fueled-2017-price-surge-study-says https://www.google.com/amp/s/www.bloomberg.com/amp/news/arti...

unnouinceput 6y ago

"...crash from $9.5k USD to $8.5k USD in the past 30 minutes..." what's this? quality bait? BTC was up and down all the time, this is normal. Say OP, do you have bitcoins? Because it seems to me you're trying to stir something

adamhearn 6y ago
This large of a move in the BTC market recently is much more uncommon.
- wolco 6y ago
  It sounds like a big holder moving out and probably into the stock market which should be hot soon now that people are going back.
WheelsAtLarge 6y ago
OP, is probably a new investor having to deal with the ups and downs of Bitcoin. The volatility hurts when you have real money on the line.

gitgud 6y ago

Correct me if I'm wrong but there's many reasons: - It's an unregulated market, so there's nothing preventing wealthy actors from buying up tonnes and artificially increasing the price, e.g: "pump n dump". - It's inherently speculative and has no real use besides investing and unregulated money exchange. - It's a global market, people from all over the world have access to the market with little overhead, making it volatile.

mettamage 6y ago
> It's inherently speculative and has no real use besides investing and unregulated money exchange. How about sending cash? You can do that with a bank account. But what if you can't? 1.7 billion people are unbanked and some of them do have access to computers. There are situations where cryptocurrencies are currently the only solution. Sure, not for you, or for me. But definitely for a large group in the world that we don't know much about, because we don't live their lives. Edit: the more I reread my reply the more it fits "unregulated money exchange". But I'd like to argue that such a thing is a real use case. And by trivializing it you're not allowing yourself to understand it with minimal bias.
- notahacker 6y ago
  > But what if you can't? 1.7 billion people are unbanked and some of them do have access to computers. And absolutely none of them are or should be storing their limited assets into something they can't change into spendable cash in the local economy without access to a bank account [even without taking into account volatility etc]. Regulated money transfers already serve this population much better for sending money long distance because they get cash at the other end. No matter how hard newly-minted foreign millionaires try to enlist them in the dump phase of their money-printing scheme, people in the developing world don't have a need for computer based tokens with volatile notional value which are not only not accepted by people in their local economy but also completely unintelligible to them The real demand for unregulated money exchange is of course unlawful transactions, and serious crime like extortion undoubtedly represents several orders of magnitude more volume in the BTC economy than serving the unbanked.

throwaway743 6y ago

I'm assuming you bought high? Learn to read trading indicators. You'd see that it was massively over bought and bound for a bit of a correction. Also, if you think this is bad... you haven't been in the shit yet/must be new to this market.

mekster 6y ago
What is the indicator that made you think it was massively over bought at $9.5k?
- throwaway743 6y ago
  RSI(28) started peaking on the daily chart. Weekly and monthly charts are showing room to move either way. Stochastic RSI is at mid range on weekly, moving upwards, and has yet to cross over. Same for monthly, except it's moving downwards. Daily was pretty oversold, but longer term looks to be brighter.

decentralised 6y ago

You're new to this :-) Look all cryptos are extremely volatile because the real market liquidity is an order of magnitude less than most people think it is, and the way automated market makers work force all exchanges to keep their prices "in sync" to avoid arbitrage like we had in the early days when it was possible to buy for 50$ in one exchange and sell for 100$ in another.. On the plus side, atm BTC is up ~8% in the last year and about ~22% since the beginning of the month. Source: me a blockchain dev, former CTO of a crypto exchange that raised 30M in an ICO.

random_moonwalk 6y ago
I'm curious how the automated market makers keep the prices in sync across exchanges, any more detail you can offer/links to further reading?
- decentralised 6y ago
  Most of what I know I picked up by looking at AMM vendor websites and papers as well as attending industry conferences and talking with the people there.
tuesday20 6y ago
A bit off topic - is it worth learning blockchain tech? Is it a viable career? If yes, where should be start - btc, eth..? Or something else?
- rini17 6y ago
  It is certainly useful to learn enough to dispel the bull "X will be better with blockchain".
  - mettamage 6y ago
    I second this. Blockchain is still an amazing technology though. I think the general concept is even way cooler (blockchain is, I think, an implementation detail). The concept is: decentralized databases When should you have that? Well, one example: whenever you need a database, and a centralized database is politically or socially impossible. Fun fact: bitcoin is a better currency than any currency that is undergoing hyperinflation right now. Some of those places also can't have centralized databases.

s1t5 6y ago

Only midlly related - for the past couple of years (since the crash of early 2018) following the crypto markets has been incredibly boring because of how highly correlated all the coins have been. Just have a look at coinmarketcap - the line charts are nearly identical.