Market Monster
Market Monster 3 minutes reading from Bitcoin

Op-ed | Ponzi and Fear of contagion

There is really no better opportunity than this for institutions to step in and wreck everyone.

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FTX ponzi and fear of contagion has everyone pulling their crypto off exchanges. If there is a large move upwards, everyone will be waiting on KYC to participate because DEXs will experience massive slippage.

Liquidity is significantly low. Larger institutions are taking advantage of the chaos and buying large liquidations off the books. For example Binance inquiring about saving FTX and "helping" small projects in a liquidity crisis.

Losses need to be claimed before the end of the tax year for tax loss harvesting, so these deals have to happen now. This is also true for retail traders. Everyone is selling their bags for tax loss harvesting but can't buy back for a time due to wash sale rules.

Now we are entering into the holiday seasons. Everyone who has money already has their plans set in place and are now off to have their 2-month holiday yacht parties.

Retail traders are also off to be with their families and will be unable or uninterested in trading.

So there are large institutions accumulating and acquiring projects off the books and there are major obstacles to market participation for everyone else.

On top of that, everyone is expecting 10-12k BTC and nobody really plans on entering the market in any meaningful way until then.

It really wouldn't take much at all to send BTC into a massive move upwards. Anyone waiting for 10-12k would miss the bottom and be forced to enter much higher after the big institutions initiate the upward move.

This would cause a massive short squeeze, liquidating all those accounts and forcing those traders to buy into the market over holiday dinner.

All the while, everyone who sold their bags for tax loss harvesting will be waiting for their wash sale period to end before getting in on the move.

And everyone who moved their crypto from the exchanges will be waiting on KYC to a new exchange to get back in. And massive requests for KYC will certainly slow things down.

By the time anyone knows what's going on the market bottom is long gone.

If I ran this show I know what plan I would set into motion before departing on my megayacht.

This post is based on this twitter thread.


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