There are tons of reasons for markets to go up and down but the negative news has always had more influence on the investment decisions of people. Due to the nature of human beings, we tend to be conservative when it comes to take a step into something uncertain.
Unfortunately, the global actors, whales or whatever, cannot let everyone win at the same time. Since the investment decisions are double - sided, while I am the seller, you are the buyer or vice versa, there have to be some counterparties to have some fuel for the trend.
In an uptrend, the short positions are the main source of fuel to push the price higher and liquidate more short positions. Similarly, the perfectly positive news at the top of the cycles are only to keep the buying pressure vivid while they are dumping their coins on the naive investors. This is what we call distribution at the top whereas it can also happen as accumulation at the bottom.
Artificial Noise in the Market
I see two strong narratives that turned the market red already:
The first one is that the ancient crypto exchange, MtGox moves $7B worth of Bitcoin and it may dump Bitcoin to pay for the former customers. Though there is a tendency in the market to go red, the cheap Bitcoin is something both spot Bitcoin ETF investors and ordinary crypto investors want to have.
While the interest rates are above 5.5% in the U.S., the price of Bitcoin is close to its previous ATH level. Imagine it when the rates are cut by half 😉 No cheap Bitcoin will be available from now on.
The second narrative was that Kashkari believes that interest rate hikes may occur if necessary. Frankly speaking, it is ridiculously hard to happen because the banks in the U.S. are falling. After the pandemic, the stores and the banks that gave loans to such businesses went through big trouble and the new era does not require lots of physical shops around while you can order everything online.
As the money became scarce and more valuable, it brought another problem for the banks that hold government bonds with very low interest rates. So, the higher the interest rates by the FED, the more loss of value in the banks that may trigger domino effects with bank runs.
It is time for investors to close their ears and eyes to such misleading and short term FUD news. When commodities, precious metals, stock markets, and crypto are gaining value, there will be some " attempts " to keep retail investors away from the high - profit investments.
What do you think about the recent fearful news surrounding the market?
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