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Bitcoin Price: How Investor Emotions Affect Crypto Prices

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Bitcoin Price: The reason we see such a massive slump in cryptos this year can be attributed to the emotions investors felt when they lost.

It is always easy to confuse the way trading works these days. After so much digitalization some people think that the trades mostly happen through logic, algorithms and so on. However, this is not necessarily the case. One of the most significant factors about trading is the human emotions that come with it.

Try to imagine it. You’ve just made a trade and bought some Bitcoin. Now you see that the price is decreasing rapidly, so naturally, you get the sensation that it is time to sell it, but all of the advice on the internet is telling you to hold and wait. This is where the first problem is met as human emotions are starting to battle logic and hard decisions.

You may find it hard to believe if you’ve traded on other financial markets but these human emotions can have a toll on crypto prices. On other markets its very hard for these emotions to have a significant impact, because of how big the market is. But for cryptos, the market is very small, so a select few investors could make some change in the market if they buy or sell prematurely. Let’s look into the main reasons why people face emotional, moral and psychological barriers when trading cryptos.

 

One Primary Example

Back in 2013, Bitcoin was sitting comfortably on the $1,200 mark. But it fell 50% when the Chinese national bank announced it would ban it in its systems. Everybody back then thought it would be a killing blow to cryptos, but as you can see it was not even a scratch.

This wasn’t logic affecting the price, and it was human emotions. Investors panicked and sold their assets immediately fearing that they were now obsolete when there were millions of people and thousands of exchanges in the world still accepting them. Don’t take the info at face value, do the research, listen to the experts and find out how dangerous it is before making any significant decision. You’ll need to do this quickly, however, as the panic spreads quite fast.

 

Moral Problems

Cryptos and morals aren’t the first things you’d imagine to have a connection, but they honestly do. Let’s look at it with a different perspective. You’ve just invested in a new crypto company that released their latest coin, and you already see that the development team is having some feud.

This immediately lights up your good alert, if you want to call it that. This gives you a sense that maybe this company will go under if the developers continue to fight. And you won’t be the only one. Many traders are affected by the politics of the company when some drama occurs, and they find it very hard not to have some concerns. The best thing to do here is to keep an eye on how things develop, and if there are actual threats that developers will leave the company, then it’s a good time to sell. Don’t sell prematurely, wait and see.

 

Psychological Problems

Human psychology is a fragile thing. Introduce it to any stress, and you will soon start seeing the cracks. The volatility usually creates the cracks in the crypto market. Many people can’t handle the mental pressure that comes with prices jumping up and down all the time. We are very basic beings, we like stability and when everything goes as planned. The moment something goes wrong, we panic. Remember the first time you started trading. You probably spend the whole day looking at the charts of your investment. The same thing happened to me when I first invested in Ripple and looked at its charts the entire day. Every time it would take a downwards direction, I’d have a mini panic attack.

The best thing to do in this case is to ignore it. If you have a long-term investment, ignore looking at charts all the time, keep focused on the news and how things develop. If you continue looking at the charts it will take a massive toll on your mental situation, your conscience will urge you to sell when there is a relatively big slump, but after the sell, we always regret it.

Another problem is when we are at a crossroads of, going with the crowd or following our path. Usually, for a beginner, it is one of the biggest mistakes to trade against the trend and go on their own, as they have no experience of the market yet. Although it is taxing on the mind to fall in with the crowd, especially in our day and age, it’s best to fall in line in the beginning.

 

Emotions We Feel When We Lose

The reason we see such a massive slump in cryptos this year can be attributed to the emotions investors felt when they lost quite a lot of capital during the January slump. We as humans tend to avoid losses more, than chase profits. It’s psychological as well. It’s more critical for us not to lose $10 than it is to gain $100.

After the slump investors became very disappointed with the market and avoided it altogether, further selling off their assets and bringing the price even lower, which at the end created an illusion of reinforcement for their disappointment and decision to leave.

 

How You Can Control Yourself

If you are a beginner, it seems impossible to control yourself when the price is falling. What you need to do is try to become a bit more patient.

First things first, try to avoid looking at the price every hour or day, think more long-term. When looking at the price think about 1month from now or even one year from now. It will calm you down.

When you see a feud happening in one of the companies, do more research. Find out why it happened and see similar scenarios in the past. If the past had people leave the company, then you have a good source to back your decision. Don’t just follow your gut.

If you have lost some capital with cryptos in the past, take a moment and trace it to a specific article or occurrence that it may have caused. Once you do, you’ll know exactly what caused it and will become more prepared in the future. If you want to get back in the game, go for a minimal investment to test out the waters.

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The Current Bitcoin Market Scenario: Price Manipulation by Whales

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The crypto markets started the last week with a different Euphoria. Each and every trader watched as Bitcoin rallied past $7000 to an astonishing $8000.

The crypto markets started the last week with a different Euphoria. Each and every trader watched as Bitcoin rallied past $7000 to an astonishing $8000. However, at the dawn of Friday, 17th May they woke up to a different scenario. The bitcoin gap just went lower by about 20% or over $1500. As a result of that, the rest of the crypto market was brought down. Some traders were caught unawares while others had foreseen it. The question on every person’s mind was what just happened and which direction should be taken now.

 

It all started on the Bitstamp exchange at about 10 pm ET on Thursday, 16th May. At that time, numerous crypto traders honed in the rather suspicious sell wall. The trader placed a sell order for 3,645BTC (c. $22m) on the exchange. It was formed at a moment when the Bitcoin market liquidity was at its lowest. It especially happens on a singular exchange.

 

The immediate reaction was to reduce the price of Bitcoin on Bitstamp. You could even view the spread in cost between other exchanges and Bitstamp. Such exchanges could include Kraken and Coinbase. As a result of the crypto market arbitrage, the prices on other similar exchanges followed the same track. Bitcoin would fall across the board. The rest of the market sank. It is due to the correlation of the other crypto assets with bitcoin. However, there was far more on the move than just a mere massive Bitcoin selling.

 

What occurred with the wall was an example of cryptocurrency spoofing. On a clear observation, one could notice that the selling wall decreased by the coming of more orders that matched it. This kept occurring as Bitcoin passed through $7500, then $7000 and thereby hitting around $6200. In the end, the sell was completely consumed albeit at a seemingly reduced price.

 

Then, once the cost had hit around the $6200 level, there was another massive buy well that was created on the same exchange ($11m). It could have brought about the sudden recovery that we have noticed in the price greater than $7000. It gave a clear evident of cryptocurrency spoofing in reality.

 

The gentleman or lady behind this doing was clearly attempting to impact the price. There are very few surplus explanations to answer why they would have issued an order of that magnitude at that moment. If an individual had the desire to trade a huge block of Bitcoin at the most suitable price, they would attempt to facilitate an OTC deal. It would be of minimum impact on the market.

 

Furthermore, the timing of a massive buy wall immediately after the trade wall coming to light is suspicious. It is either the orders were greatly coordinated or completed by rather the same party. Similarly, this can also occur on the reverse as sellers place large buy wells. Back in April, something of the sought happened. It was as an individual trader placed a massive order through. It was at a seemingly illiquid moment.

 

Spoofing is something that is considered illegal at the traditional financial markets. However, it is given the unlimited character of the cryptocurrency markets. On the other hand, whales tend to have free reign. However, a question pops up, why would a whale have an urge to tank the market in that way? The solution could lie in a completely distinct market.

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Alert: GotSatoshi Reveals the Real Identity of Satoshi Nakamoto?

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A new website called GotSatoshi now claims to know the real identity of the founder bitcoin Satoshi Nakamoto.Here is what they revelead.

The identity of Satoshi Nakamoto is one of the biggest secrets in the world, especially in the cryptocurrency industry. A lot of people have speculated the real identity of the bitcoin founder and some people such as Craig Wright has even self-proclaimed themselves to be Satoshi Nakamoto. A new website called GotSatoshi now claims to know the real identity of the founder bitcoin Satoshi Nakamoto.

 

Where in the world is Satoshi: The Countdown ends

The website ran a countdown and also posted on their official twitter account claiming to know the real identity of the founder of bitcoin.

 

The countdown which ended just a few minutes back (from the time of publication) revealed a video which is actually marketing a news website called PaiNews. It seems that it was just another joke or a method of fooling and attracting traffic to the website.

 

What are your thoughts on such lame jokes or methods of attracting traffic? Tell us in the comments section below.

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Kevin O’Leary from Shark Tank calls Bitcoin: Garbage and a Useless Currency

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During an interview with the CNBC, Kevin O'Leary from Shark Tank said that according to him Bitcoin is garbage and a useless currency.

During an interview with the CNBC, Kevin O’Leary from Shark Tank said that according to him Bitcoin is garbage and a useless currency.

 

Kevin O’Leary calls Bitcoin Worthless

Famous as the founder of Softkey, a startup that earns annual revenue of around $29 million and a host on the American business reality series Shark Tank, Kevin O’Leary is a celebrity amongst the business class in the United States of America.

 

During the interview published on 14th May 2019, Kevin expressed his thoughts over the king of cryptocurrencies bitcoin and called it a useless currency as the people who accept it just wants to hedge against the high volatility of the virtual currency. This comes in the midst of the current bitcoin surge as the virtual currency doubled its value in just a few days from below $4000 to more than $8000.

 

Kevin also explained why he has such negative views on bitcoin giving the instance of how once he tried using bitcoin for a real estate transaction in Switzerland. He said that it is not possible to get in and out of bitcoin while transacting in huge amounts.

 

He also gave an example stating that if one wants to buy real estate in Switzerland for $10 million. The seller wants a guarantee that the value comes back to him as currency at ten and the buyer has to hedge the risk of the cryptocurrency, hence it is not a real currency. Kevin said that the seller or the receiver would never want to take the risk of such high volatility and thus BTC is worthless.

 

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