What is really happening with BTC? Momentum Ignition
I recently read an article by Ossettia (a crypto trader I follow) called Bitcoin and Barts: An Explanation (medium.com/@ossettia/4db67d3f20e9) that gives the most plausible explanation of what we're seeing with BTC price movements of late. Lets face it, some of these surges and dumps are far outside the realm of traditional TA and seem to surprise even seasoned traders.
The article does a great job explaining why we might be seeing the trading patterns we're seeing these days ("Bart" pattern that people laugh about) and what this means for Bitcoin long term.
Essentially, in Ossettia's opinion, there are one or more players who are using an aggressive trading algorithm bot to 'exploratory trade' (mass pump and mass dump) to seek out liquidity (explore) as well as trigger stop losses and trade (buy/sell) orders (this is the momentum ignition part).
In many cases the algorithm doesn't need to be too aggressive, as simply encroaching on areas where there are stop losses and orders set will do the job to trigger a cascade of orders as the price sharply rises or falls. We can clearly see this happening on the charts.
Credit Suisse did a report on this type of algo in 2012: zerohedge.com/news/2012-12-14/momentum-ignition-markets-parasitic-stop-hunt-phenomenon-explained and this is another quick explanation of it: neurensic.com/momentum-ignition-arson-financial-markets/
His theory is that there is a smaller fund/shop that is behind this particular algo bot and is doing it for a specific purpose (accumulation and testing the various price points for liquidity at the same time).
Worth a read.
The article does a great job explaining why we might be seeing the trading patterns we're seeing these days ("Bart" pattern that people laugh about) and what this means for Bitcoin long term.
Essentially, in Ossettia's opinion, there are one or more players who are using an aggressive trading algorithm bot to 'exploratory trade' (mass pump and mass dump) to seek out liquidity (explore) as well as trigger stop losses and trade (buy/sell) orders (this is the momentum ignition part).
In many cases the algorithm doesn't need to be too aggressive, as simply encroaching on areas where there are stop losses and orders set will do the job to trigger a cascade of orders as the price sharply rises or falls. We can clearly see this happening on the charts.
Credit Suisse did a report on this type of algo in 2012: zerohedge.com/news/2012-12-14/momentum-ignition-markets-parasitic-stop-hunt-phenomenon-explained and this is another quick explanation of it: neurensic.com/momentum-ignition-arson-financial-markets/
His theory is that there is a smaller fund/shop that is behind this particular algo bot and is doing it for a specific purpose (accumulation and testing the various price points for liquidity at the same time).
Worth a read.
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