Great write up David! Like yourself I will die in this hill. What do you think is the most likely reason the lag time between orca buying/selling and price rising/falling fluctuates? Take care friend.
This is a question I've been struggling to find an answer to because I had the very same question the second I saw the graph. i.e., The effect is real and consistent; I just don't know why (yet). If I come up with a potential explanation, I'll certainly share! And thanks for the compliment and question!
I was just thinking that, maybe with so much coins they mostly only buy/sell OTC, and OTC slowly transact those coins on exchanges over days/weeks. David?
They definitely buy mostly via OTC desks to try to minimize the effect they have on the order books/spot prices. That said, I'm not sure this explains the delayed reaction in PA. Such orders could very well be delayed in showing up on chain, but when huge swaths of coins come off the market in a short time, I can't figure out why the PA we see on the open market is delayed in reacting.
Hi David, what do you make of the fact that in 2017 the 1k-10k coin cohort began decreasing at $4K yet the price continued to $20K? They didn't meaningfully begin adding numbers again until Oct 2018, 10 months after the end of the bull market.
I didn't participate in the market during the 2017 run and thus do/did not have access to the same data, but based on your explanation of what transpired, my guess is three things: 1) whales don't often try to buy the absolute bottoms nor sell at the absolute tops. They don't need to. They often trade "shins and shoulders," meaning above the feet (bottoms) and below the head (tops); 2) They very likely underestimated just how high price could run up. I've heard stories from folks at the time that were convinced the peak would be $7,500, then $10K, and yet it blasted thru close to $20K. i.e., NO ONE know where a market will peak, and the 2017 mania is clear evidence of that fact; 3) Related to the incredible spike, it was possible then only because of the relatively lower prices then. i.e., Even at its peak of $20K, that is still less than 40% of today's current price, meaning retail buyers had a lot more purchasing power in 2017 than they do now, so retail investors COULD make the market (start, reverse and extend price trends) in a way they no longer can. i.e., At today's prices, and certainly if/when price starts galloping to $100K and beyond, retail investors will have very little purchasing power, w/BTC being 5x or more the price it was during the 2017 bull run. For this reason, and as I have explained in this article and elsewhere, it will be institutional FOMO, not retail FOMO, that will be necessary to get prices up to $150K, $200K and beyond. All that said, there is the potential for a much greater number of retail investors FOMOing in this time around simply because so many more people know about BTC, are less scared of it, and have many more and much easier onramps (which could soon include an ETF). For this reason, I do think retail investors will contribute quite a bit to the price runup, but again, they will "only" extend the prevailing run, not cause or reverse it.
Great write up David! Like yourself I will die in this hill. What do you think is the most likely reason the lag time between orca buying/selling and price rising/falling fluctuates? Take care friend.
This is a question I've been struggling to find an answer to because I had the very same question the second I saw the graph. i.e., The effect is real and consistent; I just don't know why (yet). If I come up with a potential explanation, I'll certainly share! And thanks for the compliment and question!
I was just thinking that, maybe with so much coins they mostly only buy/sell OTC, and OTC slowly transact those coins on exchanges over days/weeks. David?
They definitely buy mostly via OTC desks to try to minimize the effect they have on the order books/spot prices. That said, I'm not sure this explains the delayed reaction in PA. Such orders could very well be delayed in showing up on chain, but when huge swaths of coins come off the market in a short time, I can't figure out why the PA we see on the open market is delayed in reacting.
Hi David, what do you make of the fact that in 2017 the 1k-10k coin cohort began decreasing at $4K yet the price continued to $20K? They didn't meaningfully begin adding numbers again until Oct 2018, 10 months after the end of the bull market.
I didn't participate in the market during the 2017 run and thus do/did not have access to the same data, but based on your explanation of what transpired, my guess is three things: 1) whales don't often try to buy the absolute bottoms nor sell at the absolute tops. They don't need to. They often trade "shins and shoulders," meaning above the feet (bottoms) and below the head (tops); 2) They very likely underestimated just how high price could run up. I've heard stories from folks at the time that were convinced the peak would be $7,500, then $10K, and yet it blasted thru close to $20K. i.e., NO ONE know where a market will peak, and the 2017 mania is clear evidence of that fact; 3) Related to the incredible spike, it was possible then only because of the relatively lower prices then. i.e., Even at its peak of $20K, that is still less than 40% of today's current price, meaning retail buyers had a lot more purchasing power in 2017 than they do now, so retail investors COULD make the market (start, reverse and extend price trends) in a way they no longer can. i.e., At today's prices, and certainly if/when price starts galloping to $100K and beyond, retail investors will have very little purchasing power, w/BTC being 5x or more the price it was during the 2017 bull run. For this reason, and as I have explained in this article and elsewhere, it will be institutional FOMO, not retail FOMO, that will be necessary to get prices up to $150K, $200K and beyond. All that said, there is the potential for a much greater number of retail investors FOMOing in this time around simply because so many more people know about BTC, are less scared of it, and have many more and much easier onramps (which could soon include an ETF). For this reason, I do think retail investors will contribute quite a bit to the price runup, but again, they will "only" extend the prevailing run, not cause or reverse it.