Who’s doing the selling and why?

After settling down and regaining the price level lost on high volume during the day in the U.S. yesterday, and a quiet overnight in Asia, Europe woke up this morning in a sell mood too, albeit with little conviction, pushing BTC below the crucial 2370 level once again.

When looking at the volume figures for BTC and matching them to the time of day, there is little doubt that the bulk of yesterday's panic selling happened under the U.S. watch. That's a pretty good indication that the bulk of the sellers were U.S. based, but it’s in no way conclusive. Nevertheless, when looking at price action, one can’t help but imagine all those newly rich U.S. crypto techies rushing to the exits in a panic that was partly caused by the loss of confidence caused by the GDAX Ethereum incidents (in plural). (http://www.coindesk.com/gdax-exchange-reimburse-ether-flash-crash/)

Oh, and there probably were the select few newly “initiated” who bought at the highs who were also panicking (https://www.reddit.com/r/Bitcoin/comments/6d6jgk/dan_bilzerian_saying_to_his_instagram_followers_i/), but I would put them into the minority category since, by almost all accounts we’ve seen on the subject, the majority of fiat coming into crypto in the last few months has been on the part of high net-worth individuals, and those folks are not known for selling into holes. (If we had been hearing stories about massive public buying, then I’d be talking a different story.)

These are just theories at this point, based on a limited number of objective facts, but I suspect that time will confirm that those currently selling are not new investors but rather the nouveau riche in a panic at the slightest of price worries. With over 80 billion dollars worth of new total market capitalization in the last 4 months, the legacy whales with their Pavlovian P&D conditioning have been overwhelmed and severely confused and are surely seeking their exit with complete abandon as they seek new haunts somewhere else.

The good news? Well the upshot is based on the principle that there are two sides to every trade, and if it’s these “early adopters” who are selling, then the buyers must be newcomers to crypto, and if newcomers are savvy high net-worth individuals who are on the bid (which is exactly where their profile would have them), then the future looks bright.

If these premises are correct, I don’t think humble folks like us should worry too much about this recent sell-off. The game has changed, for better or worse – worse for the price manipulators of the past, and better for the rest of us – and that is very good news for crypto indeed.

By the way, at the time of publishing this post, BTC on Poloniex was still below the very important U.S. breakdown level of 2370 in an indecision pattern at the 50% retrace zone possibly set to complete a 1-2-3 reversal of the short term sell-off. Looks like Europe continues to be on balance bullish as well, but perhaps patiently waiting for more bargain basement prices. It’s now 9:30am in New York and the American cycle is starting out with another a break lower out of that indecision pattern. The 50% retrace setup is broken. Nice way to start the day.

Buyers are especially happy.

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@cryptographic