New tool in Plunge Protection Team's box?
Anyone who has been in the stock market would be familiar to a friend "Plunge Protection Team". It is rumored to be directed by the central bank to prop up the market at critical level in the stock market - usually at previous supports or Fibonacci retracements, which give them the biggest bang since there are always Algo and traders ready to pounce and follow the trend once the drop reverses.
You look at that yourself.
What I am saying is not that the central bank has now BITCOIN's back, but just that at the first 15 minutes that the stock market opened this morning and was at risk of repeating what it did yesterday in fading all the gains at the open, a secret entity went right in and prop up the market - BITCOIN - that was creating all the headlines today.
Futures Market takes Pricing of BITCOIN from Exchanges
Most people still don't understand the nature of BITCOIN has changed forever ever since the launch of the futures market last year. There were a couple of blog posts comparing how each year BITCOIN underwent a crash in January but I must say they're now comparing apples and oranges. Pricing in BITCOIN is no longer in the exchanges' hands. Period. It's always in the wall street bankers' plan and script to control this market and they achieved the first step with the futures market. This is what they are good at and, I mean, are really good at. BITCOIN trading before are like fighting a guerrilla war. The big guys have no way of winning. Now, setting up the futures market is like opening a new theater on the plains where they can bring in their planes and tanks.
Oil Futures
| Oil | Barrels traded |
|---|---|
| Volume of oil produced per day | 80M Barrels |
| Volume of oil traded per day in the futures | 1.3M Contracts = 1300M barrels |
Oil Production daily
| Rank | Country | Oil Production (barrels per day) |
|---|---|---|
| 1 | Russia | 10,551,497 |
| 2 | Saudi Arabia (OPEC) | 10,460,710 |
| 3 | United States | 8,875,817 |
| 4 | Iraq (OPEC) | 4,451,516 |
| 5 | Iran (OPEC) | 3,990,956 |
| 6 | China | 3,980,650 |
| 7 | Canada | 3,662,694 |
Who do you think get to price the oil? Russia? Saudi Arabia or even Canada? No, the most actively traded oil futures market is in the UK and that's why it's called the BRENT index. A futures market market that is trading 1300M barrels per day would of course have the say on how much the oil should be as opposed to Russia, Saudi which combined produced 20M barrels.
The same behavior is now exhibiting on BITCOIN.
Implication?
Today's plunge tells you that there is no safe heaven in any particular ALT-COIN if the grand daddy is throwing up. BUT BUT BUT. If the plunge becomes so severe as to affect the mainstream market, the central banks will waste no time in coming in for the rescue.
- Bond market stability
- Stock market stability
These two markets are what they save at any cost. I'd say they care a lot more about the bond market and sometimes if the bond market plunges too quickly, they may even engineer a short term drop in the stock market to drive money back into the bond market. The debt that governments are carrying these days mean there will be no way they will allow the bond market to go belly up. As long as the bond market is stable, they will continue to prop up the stock market at any sign of a weakness developing as you can see the last two days.
That means next time when the cryptomarket drops a lot and if you see them almost at previous supports or Fibonacci retracements I mentioned before, you can feel much more at ease buying. If BITCOIN manages to get above the 11700 level, we should be looking at further gains towards the 13200 level. Watch it like a hawk. If it goes above it, you can get into ALT-COINs for even greater gains.
Sidenote: I am looking at leasing some SP, here is the offer if you're interested.