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Bitcoin Whales Vs. Retail Traders

Bitcoin Whales Vs. Retail Traders

Bitcoin could not make a decision over the weekend because it cannot make such a big move on its own. It has to rely on the outlook of larger markets on trading days to assume a definitive direction. At this point, it is mostly the whales and market makers deciding what happens next in the market. This is made further clear by a look at the commitment of traders (COT) report from Bitcoin CME Futures. We can see how the whales have been trading BTC/USD against retail traders. Some fund mangers have been trying to mimic the moves of these whales but it is the whales that make the most profitable traders. Interestingly, they are still net long on the market but all of that could change soon if they switch sides and decide to prey on the bulls. 

We can see how retail traders are on the wrong side of the trade most of the time based on the COT report. The period between January and April saw one of the most explosive growth periods in recent history. Yet most retail traders were short while the whales were long. Asset managers quickly caught up with the moves of these whales. Leveraged money has also been on the wrong side and as we can see it has been the worst performer of all. The big players in this market or any market do not play by the same rules. They do not just rely on Fibonacci retracements or a bunch of lagging indicators. Now, lagging indicators could be helpful too if you now how to use it. For instance, we can see on the ETH/USD chart that the Ichimoku clould resistance might now push the price further lower if it fails to break to the upside which seems improbable. 

Larger indices like the S&P 500 (SPX) or the Dollar Currency Index (DXY) have historically had a strong impact on the price of Bitcoin (BTC). We can see a slow down in the stock market but investor enthusiasm in the cryptocurrency market is still sky high. Meanwhile, the USD/CNY forex pair is ready to decline down to the 61.8% fib level. If it holds that level, we can expect a move higher to resume the uptrend. Otherwise, we would see a brutal decline in this pair which will coincide with capitulation in the cryptocurrency market. We can see that retail traders are betting big on the price shooting higher before the next halving but considering that trading is a zero sum game and the whales have been preying on retail traders all along, if everyone gets bullish, the whales would be left with no choice but to crash the price. There is no use trying to find the big players in this market because they will always win. This is why the best traders follow in their footsteps and catch their trail rather than fighting the market and going against the trend. 

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Published at Mon, 13 Jan 2020 18:04:38 +0000


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