Thank you! It's incredible how once BTC lost the $20k support, it fell down to the next nice round significant-ish number, ~$19k. The psychology of this seems to be very powerful.
OP here. Per the article, it's not "psychology" - it's a whole lot of borrowing on the defi markets that will automatically be liquidated if the number goes too low. You could actually watch these guys in real time, pumping scarce actual-dollars into the market to pump the price. And then sellers dumping directly into the pump. "Thanks for the exit liquidity!"
I don’t understand why the dumpers need the pumpers’ actual-dollars to dump. I thought, when you sell on an exchange, the exchange is obligated to give you actual-dollars no matter what?
the dumpers didn't want the price going under $20k either, but they did want the ~$20k
it has less to do with that and more to do with forced liquidation numbers
People set up automatic sell orders for when a thing falls below X. And people generally prefer round numbers, for reasons that are not very mysterious.
BTC is about to hit new levels of support ;)
Would love to know because all instruments behave this way. There's tons of action in S&P 500 options at, say, 3650, but there's no action at 3640 and 3660 even though those strikes technically exist.
Maybe something like thresholditis. People would say "If it hits 20K I'll sell" and a set of other people think "If it hits 20K I'll buy" so it fluctuates around 20K...
That's not the only thing going on here. There was a strong belief amongst the bitcoin faithful that Bitcoin's price could not fall below the peak of the previous bubble (this made no sense, of course, and required selective viewing of the price history to believe in the first place...)
Assets don't prefer anything. The people placing orders have a bias for round numbers. Why? For one, it's just human psychology to round. Second, liquidity is good at those levels, amplifying the effect.