Nerd Talk

Today’s Bitcoin Price Drop

Today saw a dive in the stock market, and with it a dive in Bitcoin’s price. BTC tumbled over 6% after spending a full month above $11k. The price drop comes at a time when many bitcoin holders are calling for another extreme bull run, like 2017.

Here is my take on this. Bitcoin to a large degree is still tied to large moves in the stock market because of whales. Players with big money play around in the stock market and in crypto, and so when they get skittish and start pulling out of positions, they do that across the board. Hard core “bitcoiners” don’t do that, they are committed to holding their bitcoin, in some cases until what they believe will be the end of fiat currencies, and in other cases they believe bitcoin will crack 6 figures next year and are looking to cash in then.

However, whales do not care one way or the other. They are looking to make money daily on trading, and they are good at that, that is why they are whales. Personally, I like when they move out and we get to buy bitcoin at a “discount” and that wealth gets re-distributed by non-whales “buying the dip.” I think that is good for bitcoin. You can see whales getting out of DeFi today also, with eth dropping over 8% and the amount of money in DeFi moving from $9.5 billion to $9.1 billion. Money is being pulled out of everything today.

In addition, it would seem that miners moved out of bitcoin today when they saw the price movement, probably just looking to lock in their money. This is usually a signal of more sell pressure, but I am optimistic that we are still in the middle of a coming bull run. Todays sell-off would have been much worse a year ago and would have dropped below $10k (in my opinion.)

The stock market is still in a bubble. Either that or these new stock prices are signaling severe inflation and I would hope that is not the case. So, I will stick with the idea that the stock market is in a bubble and we are due for a big correction. I think when that correction comes, we will see bitcoin decouple from the stock markets trend and continue its bull run into what should be a wild 2021. In the meantime, I am going to buy this dip.

Leave a Reply

Your email address will not be published. Required fields are marked *