A massive flash crash hit the crypto market yesterday, pushing many altcoins to new lows and resulting in over $1 billion in overnight liquidations, with more than 90% of them being longs. This drop was not an accident; it was a strategic move by major players to set a trap.
Many attribute this crash to the S&P 500's decline and various geopolitical factors. While the global situation undoubtedly influences the market, there's a deeper layer of manipulation at play. Major players often use global news as tools to drive market sentiment and prices.
Recently, a surge of negative news created widespread panic, which manipulators capitalized on. However, the situation is more complex than merely shaking out weak hands. When $BTC made a new all time high in March, predictions of an impending altseason have been circulating widely. I, too, believed we were nearing it. However, I was mistaken, showing that manipulators successfully deceived even the experienced analysts.
With many analysts entering the market, manipulators have to consider the majority opinion and devise strategies to deceive them. After much analysis, I concluded the true cause of this powerful flash crash. As opinions about the altseason spread, people held onto their holdings, ready to buy every dip. However, the market can't grow with too many participants holding on tightly.
When manipulators realize people "refuse to sell," they orchestrate a significant flash crash. This drop instills fear, causing many to sell their holdings. However, experienced players might see this as an attractive entry point, believing in the altseason narrative. Here's the twist: Many people's portfolios are down 70-80%, and they've exhausted their stablecoins. Any further growth will see these individuals selling at breakeven, hoping to buy back lower in case of another dip.
In simpler terms, the market will grow, and people will fear another drop, selling at breakeven and increasing their stablecoin holdings. An empty market is often very strong and fast, driving prices higher and causing FOMO. Many will fall into the trap during the final growth phase, believing in endless growth and hesitating to sell.
The current market formation closely mirrors previous bull runs. Yesterday's drop appears to be another trap set by major players to shake out most of the survivors from the market growth. After the market is devastated, new all-time highs will be made. Most people with good entry points will find themselves buying back higher, turning into exit liquidity.
When it's time to sell, many will still believe in continuous growth. Those who stick to their strategy and avoid emotional decisions will sell and exit wisely.
This thesis is also supported by $BTC Technical analysis. By examining the Bitcoin weekly chart, we observe the formation of a bullish flag pattern. Yesterday, there was a significant wick down to the 0.50 Fibonacci retracement level, which turned out to be a fakeout. Currently, Bitcoin is trading around $56,000, showing a strong recovery from yesterday’s dip to the $49,000 region.
The Elliott wave analysis on the weekly chart is very clear. #Bitcoin❗ has completed the first three waves, and the fourth wave is shaping up as a bullish flag pattern. The $53,000-$54,000 range is crucial as it includes the trendline resistance, the weekly supertrend, and the weekly EMA 50. As long as $BTC trades above this range, the outlook remains bullish.
From a data standpoint, the situation appears favorable. Open Interest remains low, reflecting a "complicated perception" indicating that people are hesitant to trust the bounce. This sentiment is further evidenced by the funding rate turning negative. Such conditions are typically indicative of a potential macro recovery.
