Juicing The Markets
Most central banks are stock market participants whether they’re open about it (Swiss and Japanese) or not so open about it (US Exchange Stabilization Fund) so you know the stock, commodities and foreign exchange markets are juiced. Central banks globally are printing around $200 Billion per month in new currency and I would hazard a guess that most of that is going into support the global markets.
I’ve always wondered about cryptocurrencies. It is my contention that central banks/governments are also meddling in cryptocurrencies. It’s not as easy to manipulate cryptocurrencies as the stock, FX and commodity markets because you can’t weigh on cryptos as much as you can on other financial instruments that have derivative associated asset classes.
The window is smaller to get in and out of cryptos not to mention that you need to own the actual underlying crypto asset in question. You can’t just create a paper derivative contract out of thin air (a la gold futures).
The $5000 Round Number
In technical trading terms, round numbers are extremely significant. Just as $100, $1000, $2500 were all important markers for Bitcoin to surmount, $5000 is an extremely significant number and it propels Bitcoin into a new stratosphere. The next important number is obviously $10,000 USD.
Bitcoin hit $5003USD today and looks like it’s been slowly managed down since that time. Reminiscent of the far more heavy handed government footprints in the Gold and Silver markets.
As I mentioned in my article earlier this week Cryptos due a pull back, keep a lot of dry powder on hand, we are expecting a pull back in the near future. We'll need to wait and see if this is what I was expecting.
It's impossible to say whether or not this pullback is government intervention however it does serve a major purpose of both scaring new investors and creating massive volatility to ward off the public at large. New investors are likely to panic and try to sell, more experience investors of cryptocurrencies knows that these wild fluctuations are commonplace.
It’s worth noting that there will always be profit taking in the crypto space. When Bitcoin pierced $5000 USD today, I have no doubt a number of investors took profits.
None the less, I can’t shake the feeling that given they are so involved in global markets, there must be some kind of government intervention in the crypto market and huge volatility would serve in the governments best interest.