Why bitcoin is fading while everything else is gaining

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Steve Sokolowski
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Why bitcoin is fading while everything else is gaining

Post by Steve Sokolowski » Sat Apr 24, 2021 9:38 am

Two weeks ago, I changed one bitcoin to ethereum classic, which turned out to be a great decision. In fact, changing one's bitcoin into almost any other coin would have been a great decision.

Bitcoin is mired in margin trading, and nearly all of the borrowing is on the long side. When liquidations occur, a cascade happens that drops prices by thousands of dollars. The two all-time record high long liquidation days for bitcoin occurred in the past week, with nearly $10 billion lost on a single day. The chart at https://www.bybt.com/LiquidationData sums it up - note how short liquidations are only a fraction of long liquidations, even on days when bitcoin skyrockets.

Second, while people look at coins like dogecoin as a fad, the coin is serving a real purpose, just as litecoin, bitcoin cash, and ethereum classic are. All of these coins are equally capable and API-compatible with another larger coin, but have near-zero fees. The fee issue has gotten so bad that in most cases, to transfer money between exchanges or services, it is cheaper to exchange bitcoins to litecoins, send them to the other location, and then exchange them back. When I want to send money to people, I usually now pay them in litecoins.

Finally, interest rates on altcoins are exceptional, while rates on bitcoins are poor, even though altcoins typically outperform bitcoin during the uptrends. Last week, Genesis decreased its rates for borrowing bitcoins to 1.5%, but maintained 5.5% rates for borrowing litecoins. Large-cap coins like litecoin and ethereum are now relatively stable and unlikely to become worthless, and I would argue are currently less risky to hold than bitcoin is due to bitcoin's high number of margin longs.

The trend reversal in bitcoin occurred because people continue to lose enormous amounts of money buying bitcoins on high leverage, over and over, despite there being no clear trend to the upside. The price of bitcoins has been range-bound for almost three months now, with only brief spikes above $60,000, and it will not rise until the margin trading is equalized by shorts, or reduced altogether. Note that well after bitcoin reversed, ETH, which does not have as many margin longs, hit another all-time high.

Strangely, the people trading on margin don't seem to learn from their mistakes, and there seems to be almost infinite money being thrown away at this type of trading. Most likely, bitcoins will be stuck in a bear market for a while, with successive liquidation panics on every bad news article, until these traders finally run out of money and go bankrupt.

(Note: it's the last week of the month, and bitcoin always reaches its low 3-7 days before month end when everyone needs dollars to pay bills due on the first, so don't be surprised when bitcoin temporarily recovers next week. That doesn't mean that this margin trading problem has gone away.)
lily897h
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Re: Why bitcoin is fading while everything else is gaining

Post by lily897h » Mon Jun 21, 2021 10:55 am

What cryptocurrency would you advise a newcomer?
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Banished_Privateer
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Re: Why bitcoin is fading while everything else is gaining

Post by Banished_Privateer » Tue Jun 22, 2021 3:36 pm

I don't think they are allowed to share financial advice, but what I can say is do some research and look for projects that stand out and have actual utility and developers that continue to improve them. Don't buy something just because someone on Twitter or Youtube said so. It's also never bad to diversify, don't just 100% one asset, unless you don't mind the risk and truly trust it.
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Steve Sokolowski
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Re: Why bitcoin is fading while everything else is gaining

Post by Steve Sokolowski » Tue Jul 06, 2021 1:47 pm

lily897h wrote: Mon Jun 21, 2021 10:55 am What cryptocurrency would you advise a newcomer?
For others who come across this, Banished is right. We occasionally share views on coins, but will never recommend a specific coin to an individual, as we don't provide investment advice. However, other forum members are free to discuss as they wish.
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MikeWillson
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Re: Why bitcoin is fading while everything else is gaining

Post by MikeWillson » Mon Oct 02, 2023 3:06 am

Considering this post is two years old, it's interesting to reflect on how the crypto landscape has evolved. Margin trading has always been a risky venture, especially with an asset as volatile as Bitcoin. Kudos to you for making a good call on switching to Ethereum Classic back then!

I'd also add that the increasing popularity of other altcoins and even tokens from new crypto listings from presales is gradually diluting Bitcoin's dominance. Many new, promising projects are coming up that could deliver utility and maybe even better ROI than Bitcoin.
alikaka
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Re: Why bitcoin is fading while everything else is gaining

Post by alikaka » Sat Dec 02, 2023 7:48 am

Cryptocurrency trading is an area that is the most relevant and most profitable, and people who decide to engage in this area should understand that Bitcoin is one of the most in demand and is subject to either an increase or decrease in its price, and hence the question, why is this so? While I was engaged in cryptocurrency trading I realized that I need to follow the news https://www.tomshw.it/altro/cittadini-s ... ptovalute/ exactly what is happening in the world affects the statistics of the coin, and thanks to the news, I learned to understand with 100% whether I should buy this or that international moreta and whether I will make a profit from it, so I advise you to follow the news
hosenbabul15
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Re: Why bitcoin is fading while everything else is gaining

Post by hosenbabul15 » Thu Dec 07, 2023 3:08 pm

I hope now bitcoin will reach $70k this year
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