This is an institutional shakeout.
@CryptoCred has a YouTube video on institutional order flow which explains how institutional buyers engineer liquidity for large buy orders. Check out here:
The Crypto Gathering is an event held by finance reporting guru’s Real Vision. The latest event was held in March 2021 over three days where the industry giants shared their views and dealings within the space. What was interesting to note is that a number of key players were asked about whether institutional investors and/or sovereign wealth funds were contacting them in the recent months. Their responses were often simply “Yes” with large smirks on their faces and while they were unable to elaborate who these funds/nations were, it was fairly evident from the manner of response that this was indeed happening and one could assume this is happening at large scale.
The general consensus from these sources at the start of 2021 was that these institutional players were still about 3–6mths away from being able to take action due to myriad regulatory and compliance complexities. These issues would take months to work around and to develop the legal framework in order for these institutions to purchase cryptocurrencies and overcome the barriers to custody.
Custody remains one of the biggest considerations for these funds and institutions. One can imagine the complexities and concerns that arise around bearer instrument custody for Sovereign Wealth Funds looking to deploy several billion dollars into the space. Clearly a one signatory solution will not suffice if as it exposes the fund to the ability of one rogue-agent fleeing the country with 24words memorised in their head, providing access to the wealth of a small nation. Multi-sig solutions are the obvious choice here, but alas there still remains the issue of ratios of signatures:spend, e.g Does a 3/5 signatures policy provide enough security? With this being said, these solutions now exist, and perhaps enough time has now passed to have indeed start acquiring cryptocurrency by these big institutional players.
So, what to do if you have big orders to fill? If I needed to deploy billions of dollars into a space with dwindling supply (e.g bitcoin). My buy order would shake the market to the upside, people can see this order flow and start front running the trades. I don’t want to be buying on the way up, I want to be buying on the way down. How do I engineer a sell-off? It’s really quite simply, shake out the speculators.
We have had a meteoric rise over the past few months (and let us not forget this parabolic rise has been over only a short few months). A plethora of YouTube videos and crypto gurus have surfaced educating retail investors on how to trade, identify key resistance/support levels/order blocks, how to use leveraged trading and how to set stops losses.
Combine these new-to-market traders with people who blindly buy “number-go-up” narratives without putting in the time, effort and energy into the space to realise we are on the beginning of the exponential age, and you have the perfect recipe for a violent and desperate sell-off through a series of perfect consolidation points on the way down to grab more and more liquidity.
The big boys are here now and they have been playing this game for decades if not centuries. But, they have even more data, algo-computing power and something they have never had to this scale, access to your money. The past year has seen astronomical increases in retail accounts from binance, coinbase to robinhood. And stimmy-cheques. They are coming for you and your stimmy’s. They know this game better than anyone and they know exactly how to take it from you.
So, why is it that we see these intermittent shakeouts? Followed by brief periods of consolidation, only for it to go again? Here are a few things we know that they know:
· They know the game better than anyone
· They have the data to see where these liquidity grabs are located
· They know how to engineer sell-offs and instill fear in markets
· They have done the work and have more conviction than the retail traders
· They want our coins.
What do we know?
1. We know they are interested
2. We know they were temporarily hamstrung by regulatory formalities
3. We know that time is probably now over
4. We know from on chain analytics that these massive sell offs were conducted by large whales with new coins.
The on-chain metrics have shown that the latest sell-offs have been from new addresses (UTXO’s). But, we can also see from the on-chain data that a lot of this selling has been from whales (addresses sitting on large amounts of coins). Combine the age of coins spent with the size of the addresses and we can conclude that these are large, new players to the space. Old addresses are not selling. Those who have put in the work and understand bitcoin and where this is going are not selling. By the same token (pun intended), if you are a large player with access to large amounts of capital, you have also done the work and you also understand it. You are not shaken out by some news articles, social media FUD and the musings of an eccentric billionaire. You are selling with purpose.
This is an engineered institutional shakeout of the highest order. We know these players are the elites and control the narratives within mainstream and social media, this is nothing new. This is a coordinated effort to spread FUD, dump big bags into the market, and then scoop up each bottom of the market once retail is scared out of their positions. And then they do it again, and again and again it seems.
How do we know this happening? By looking at the candle patterns. Each major sell-off has been feverishly bought up at the bottom of the key order consolidation areas we had on the way up. These consolidation areas are what traders look for to set their stop losses. Each sell-off has swept a new low and been bought up leaving large swing-fail-pattern/pin-bar candles at each swing of the lows. And of course, the leveraged traders look for these levels, convinced we have hit a bottom, buy off these levels, post more collateral, and set new stops. These are the prime entries they look for everyday. The big boys are buying each of these too, just enough to fill their bags and put a bit more assurance in the market to pique the interests of retail and those brave enough to think the worst is over (but arrived later to the party than those who watch closely).
Then the big boys dump a bit more, spark the fear, shake out the weak hands and leveraged longs, rinse and repeat. Each time building their long term stacks.
Where is the bottom? Who can tell? But the retail money will dry up and the fear factor will maximise leading to maximum supply shortage. Hodler’s will Hodl. Miners aren’t selling as they now borrow fiat at all-time-low interest rates to fund operations. The supply of new bitcoin is still fixed on an ever-depreciating schedule. They have shaken out billions by now, but there are billions if not not trillions to come. When the supply dries up, this will be violent to the upside as those with bags left to fill, desperately compete to fill them. Nobody wants to first but nobody wants to be last.
This asset is THE PRISTINE COLLATERAL, they know it and they will pull every trick in the book to get to your coins.
JUST HODL.
Daz Bea
May 2021
