04 Mar Why did Bitcoin fall from it’s peak at 58k? And how to relax…
I have read posts here from people who feel that they made a mistake buying Bitcoin as it neared it’s top at 58k. I do not have a crystal ball, but I can tell you that after Tesla made it’s announcement, there was a very large influx of long positions, based on margin trading. You can see that in data,; this is not me gazing at my navel. In fact, the influx was strong and continuous, and Bitcoin reflected it. Then, an unbelievable 2.5 billion BTC liquidation occurred on the night of the 22nd, I believe. That is an incredible dump. It is hard to get your head around it. Why would that happen?
It didn’t. It was a fuckup. Willy Woo, probably my favorite Bitcoin analyst, says he talked to the CTO at Glassnode, and basically it was a wallet labelling error.
But, the consequences, as you can imagine, were huge. Overnight, we saw BILLIONS in those long positions on margin liquidate. It was like the typical cascade effect as everyone on margin starts racing for the exit, and every time they liquidate a position, it builds on the race.
Additionally, all Bitcoin miners in Mongolia are shutting down. They have been given the boot, and will shut down operations by April. The Chinese authorities in their district have been told to reduce electrical usage. Consequently, there is a steady drip drip drip of Bitcoins, partially because they floated a lot of infrastructure on the back of Bitcoins. This will not last.
But… here is the thing. This is a blip in the road, a speedbump you didn’t see, and is meaningless in the inevitable progression of Bitcoin to over $100k. If you bought in on the race to the top (I bought some on the way up), as long as you don’t sell, you have no loss. Stop looking at the tape, stop wondering if you made the right decision. Go sit out on the porch with a beer, or pretend you are on the beach wiggling your toes in the sand, because one day that is right where you will be.
“This is the way.”