There has been no shortage of commentary the last few days as BTC rocketed through $20,000 USD. For some, it was a foregone conclusion, simply a matter of time. For others, it was time to throw in the towel on shorts and jump on board. There was even overlap between those two groups. Regardless, as BTC pushed to new all-time highs, sell interest evaporated and the market became one sided.

The price action since then, of course, was not necessarily a foregone conclusion, but it also is not unexpected given the players in the market and what has been happening over the last month as BTC first approached highs only to pull back significantly, if only briefly.

Personally, I love charts. But to me, charts are a way of surveying the battlefield after the battle; of telling the story of the past. I don’t particularly like to look at charts with any sort of predictive mindset. The story that the charts told me from the mid November highs until now was one of a battle between several different types of players:

  1. Long term whales or other holders who held through 2017 highs and feel like they missed their chance to cash in.
  2. Day trader chartists who tried to line up current price action against 2017’s charts to convince themselves that history would repeat itself.
  3. Institutions or large players who had coins tied up in OKeX, who had suspended withdrawals a couple months earlier and finally opened up withdrawals on 11/26.
  4. Institutional adoption and additional accumulation from new retail entering the market.

The first 3 created quite a bit of sell interest, the 4th was the buy interest. The story of the whole fall has been about number 4. Number 4 is a behemoth, and doesn’t seem to be slowing. The charts and the price levels drew the first 3 players out into the market, and for a while a sort of equilibrium was reached. But every day, the inventory that the first 3 were selling was getting whittled down, whereas the demand for investment from number 4 continued unabated. Eventually number 4 ate through the entire sell interest, and sell liquidity evaporated, and here we are today.

What we’re seeing is a general lack of liquidity on the sell side. I’m not sure what catalyst will bring back sell pressure – it might not come until there is some sort of regulatory news that makes traders and investors pause, it might be some perceived resistance that encourages the chart readers to take some short positions. But until then, the buyers are a freight train, and I for one don’t want to stand in its path.

 

 

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