Finally, we have something to discuss in the crypto market. Today we will talk about BTC / XRP, I don’t know if it’s bots, or people really like this coin so much, in any case, this is good news for some, at least in the short term. Let's look at the factors that potentially influenced the price increase, analyze what to do with it, and end with an excellent anecdote from the book “Reminiscences of a stock speculator”.
Bitcoin showed a good growth, let me remind you that I decided to partially gain a position. I believe that until the price has left the consolidation / accumulation zone, you should not perceive BTC as a trending market. Naturally, scalpers and short-term traders may see things differently. If we look at the daily chart, we can clearly see the consolidation, the price holds the support level at $5 - $800, the next major resistance level will be ~ $6. If the price goes above $000, we will see a real trend formation. To summarize, now I just take a position and watch, I don't care if the price goes higher or lower.
So, as the entire market is influenced by the dominant BTC, then with its growth, the rest of the coins are also becoming more expensive, which is especially important for Ripple, which broke into the second line on CoinMarketCap. If you look at the 5 minute BTC / XRP chart, you can see very familiar outlines. I talked to people interacting with Ripple, and I can say that according to reviews there are working talented developers, but I only care about the schedule, and the current schedule looks like a regular bubble. Can the price continue to grow? Of course, but in the long run to win in this situation is difficult.
The most frequently asked question is “why is this happening?”. I've looked at several articles and they all talk about news about potential integrations, etc., however, for someone who has been in this market for 1-2 years, such news looks like an attempt to justify events for which no one really knows the reasons (or a very small group of people knows). That's why you shouldn't trust the news when it comes to multi-billion dollar market moves. I want to share my perspective on what has potentially triggered this situation.
First of all, trading with leverage can be useful in this situation, since you can try to ride the wave using a smaller amount of your own funds, while the chances of losing these funds will be lower. You can open a futures contract before 28 December, or buy XRP on another exchange, and use your own funds 1 / 5 as a hedging short position, in any case you will need some strategy.
There is an excellent book - "Memoirs of a Stock Operator", I recommend it to everyone, especially to those who want to understand the behavior of people with large amounts of assets. Here is the situation in a loose retelling: Jesse Livermore is being told that there is a stock in the market that will soon go down a lot. In high spirits, he enters an office where you can read a summary of open positions, goes to the best trader and declares that the shares of a company will soon collapse. The trader looks at him, then at the tape of prints, then back at Jesse, then goes to the sales counter and says, “start buying them.” Livermore replies, “Listen, I just told you these stocks are going to crash! This is great information, why do you want to buy?”. The trader looks at the tape again, then again not Jesse and continues: “buy more”. Livermore, confused, says, “What are you doing? This is madness! Why do you buy shares when you know they will fall? The trader continues to buy, after which he stops and returns to reading the tape. Livermore cannot believe his eyes and declares that the trader will lose a lot of money. The trader looks at him and the tape again, then turns to the broker and says, “I want you to sell these shares for 5000.” The broker starts to sell, and the trader sees how the price gradually starts to go down. His strategy was to create interest around the asset through large purchases. He walks up to the broker and tells him to sell all the shares and go short 100,000 more. The broker does not understand, but the trader knows that he has just created artificial liquidity into which he can sell all the shares, but first he had to test the market and secure a market for himself. He sells all his shares, the price begins to fall much faster than usual, as bearish selling pressures him. As a result, the trader makes a lot of money from open short positions. He turns to Livermore and says, "I knew you were probably right, but I couldn't just go short these stocks, I needed to make sure."
I don’t know if this anecdote has anything to do with the current situation with Ripple, I don’t know who is selling and who is buying. All I know is that there are not many strategies used by market makers and big money speculators. Imagine that you have an open position for $ 25-50-100 million, and you are in a bearish mood, perhaps you know some kind of insight. For many, this would be a sell signal, but in the crypto market it is a pump signal, because otherwise you will not be able to sell so many coins, since there will not be enough liquidity. Thus, before the collapse, you need to raise the price. Again, I don’t know how close this is to the truth, but this is a great example, and it is constantly repeated in markets like this. And so when I look at the articles on Coinbase and the like, I have a feeling that someone is cranking a similar strategy.
Looking at the live chart, I see that Ripple is starting to fall, look at the liquidity pool created. I think that if we look into it, we will see only a few wallets from which a large amount of XRP was sold at the peak of the price. Such examples are useful to know, because they are time-tested. Remember that there are always winners and losers in the market, the market is always trying to take your money. Always ask yourself who is on the other side of your open position and what drives them.