Bitcoin’s Biggest Dip

What a crazy week. We finally got that ‘God candle’ everyone was asking for all summer and saw a more than $10,000 swing in Bitcoin’s price in just 24 hours!

Unfortunately, the candle we received wasn’t the color everyone was hoping it would be.

On Friday, Bitcoin opened the day at just shy of $123k and closed the day just below $113k. But not before wicking down as low as $102,000 and almost breaking back into 5 figures!

We witnessed a $20,000 daily candle that represents the largest 24-hour price swing in Bitcoin’s history!

To try and put this in perspective, consider that Bitcoin took almost 8 years to reach $20,000, and just shed more value than that in a single day. This one 24-hour candle hammered down the price of Bitcoin more than the entire 2017 bear market!

When you put it like that, this brutal $20k dump feels weirdly bullish. In 2017, a $20,000 red candle would have sent Bitcoin to zero. Today, it’s just a 15% dip.

And who doesn’t like dip….

A lot of fake gurus will no doubt spend most of next week claiming they knew this was coming (likely the same culprits who spent the last week bull posting about ‘Uptober’).

But despite what anybody claims, the data suggests nobody saw this coming. This rapid fall resulted in a jaw-dropping $19 billion in liquidations across the wider crypto market. To put that in perspective, the ‘Covid Crash’ of 2020 only caused $1.2 billion in total liquidations, and the FTX collapse in 2021 only led to $1.6 billion.

There are, however, rumors circulating that at least one person did see this coming….

A mysterious trader allegedly opened a Bitcoin short just 30 minutes before Trump’s tariff announcements on Friday and closed it for > $88 million profit after opening their new trading account the very same day!

Nancy, is that you!?

A wild week indeed, but with several important lessons included. So let’s unpack this price action a little, do a quick post-mortem, and try to figure out what the hell just happened.

‍

Leverage Kills

We don’t normally bother commenting on price action in this newsletter because it’s not particularly interesting. We all know the long-term trend, and worrying about time frames is largely irrelevant to your success.

For us, like most of you, this is nothing more than a minor bump in the road. A 15% dip is not at all painful, nor is it unexpected. You won’t find us panicking that Bitcoin’s price has dropped all the way back down to *check’s notes*….. the same price it was just 2 weeks ago.

Unfortunately, there are a lot of people out there who are currently panicking. Billions in leverage just got completely wiped out, and inevitably there will be thousands of traders who just lost everything.

Greed is a powerful drug, and if you let it get the better of you, it can lead you to financial ruin. In the short term, and especially during bull markets, leverage can make you feel like a financial genius who is maximizing their returns. But just like gambling in Vegas, if you keep playing long enough, eventually you’ll lose big.

The full implications of this rather large shakeout are still yet to be seen. We still don’t know how traditional markets will behave come Monday morning, and it’s going to be interesting to see how the Bitcoin Treasury Companies will fare given their recent lackluster performance.

Unfortunately, we’ve already started seeing casualties float to the surface.

It’s heartbreaking to see, but a very good reminder that leverage kills. Bitcoin still represents a huge asymmetric bet that offers enormous returns. You don’t need to introduce leverage; you just need to employ a little patience.

‍

Don’t Trade Shitcoins

There will be Bitcoiners out there who have been caught offside playing with leverage during this dip, but the vast majority of pain was reserved for those holding shitcoins. If you thought a 15% dip on Bitcoin was brutal, just check out a couple of these shitcoin charts below:

Kaspa, a coin whose delusional proponents claim is a ‘better Bitcoin’ and is currently ranked in the top 50 shitcoins on CoinMarketCap (CMC), dropped by a staggering 70% in just one day!

And SUI, a coin currently in the top 20 on CMC with an inexplicable ‘market cap’ of almost $10 billion, also had a particularly bad day. It fell over 85% from $3.80 to just 55 cents:

And while these are just two of the more extreme examples, the broader shitcoin market didn’t fare any better. In fact, it was shitcoiners who bore the brunt of the liquidations. At $5.39 billion, Bitcoin only suffered ~30% of the $19 billion in liquidations that took place despite representing more than 60% of the market. The other $14 billion worth of liquidations took place on shitcoins.

The result? Bitcoin’s dominance marched ever higher, and those left holding shitcoin bags will be doomed to look on and dream about what could have been while Bitcoin leaves them behind.

The moral of the story? Don’t buy shitcoins. They are centralized vaporware propped up by wash trading. Their market caps are meaningless, and the only people who get rich from them are the insiders who create them to dump on unsuspecting noobs.

We’ve called them shitcoins for more than a decade now for a reason…

‍

Survive The Volatility – The Bitcoin Way

Next week could be interesting. When a huge liquidation event like this happens, we usually learn over the next few days that some big player or other was overleveraged, got themselves into trouble, and blew up. If severe enough, this can even lead to more short-term pain in the markets.

Everyone remember FTX?

We don’t know what’s coming next. Trying to predict the price of Bitcoin is what gets you into trouble in the first place. The important thing to remember is that there’s no such thing as a bear market in Bitcoin. There are only bull markets and buying opportunities.

Bitcoin has been in a rip-roaring bull market since the day it launched.

Unfortunately, a lot of market participants will continue to be short-sighted and, after a flush like we saw this week, will be left reeling. Don’t be surprised if we see a little more capitulation before we’re done. This won’t be the last liquidation event we ever see, and it certainly won’t be the biggest.

Hopefully, you’re already reading this newsletter unbothered, secure in full self-custody, and with no regard for the outcome of shitcoins or leveraged trading positions. But if you’re not, let this be your signal to fix that NOW!

In just weeks, our experts can make sure you know how to secure your Bitcoin for the long term with zero counterparty risk. You will be protected from exchange collapses, hacks, and the temptation to gamble. With our training, you can guarantee you won’t end up becoming one of the casualties.

Book a free 30-minute consultation today, and let’s make absolutely sure you’re one of the ones who makes it.