Retail Bitcoin Traders Repeatedly Shaken Out While Following Trends
Retail buyers helped push the price of Bitcoin back up toward $10,000 after the Black Thursday crash to below $4,000. Low prices proved to be too attractive to pass up, and traders went against the trend.
But following the initial storm of buying, retail traders following the trend has led to repeated shakeouts, according to sentiment data from one crypto analyst comparing top positions on Binance with retail traders.
Retail Buys Bitcoin’s “Blood In the Streets” on Black Thursday
Bitcoin price has been on a relatively steady upward trend since the Black Thursday market collapse.
During the selloff, Bitcoin price fell from $10,000 to under $4,000.
Retail crypto investors scooped up BTC at ultra-low prices, on fire sale after an over 60% drop from prices traded at just days prior.
The surge in buying caused a strong rebound that only now appears to be turning around.
Retail crypto investors going against the trend and herd mentality has thus far proven successful, as those who bought the lows gained over 150% on their investment.
It’s when these retail traders begin chasing the trend is when they tend to get wrecked in the price action, according to one crypto analyst’s take on sentiment data from Binance.
Conclusion: a divergence of retail sentiment with price is confluent with continuation, ever more so when top positions are following price.
Shake outs can be expected when retail sentiment leans on the side of the trend.
Extended FOMO adds confluence to reaching a local top.
— Rife (@CryptoRife) June 3, 2020
Contrarian Crypto Positions From Top Traders Designed To Shake Out Retail FOMO
One crypto analyst has reviewed weeks of price action data from Binance, comparing retail sentiment against “top positions” on the popular crypto trading platform.
These top positions are presumably more experienced traders, potentially Bitcoin whales able to use their position sizing to their advantage to move the market against smaller time retail traders.
Data shows that retail traders are actively buying the dip and FOMO shorting what they believe to the top.
As soon as this happens, “top positions” are making contrarian moves that force retail shorts to close and squeeze price upward.
This then lures retail traders to FOMO long, then the market crashes much like what transpired yesterday when Bitcoin flash crashed and wiped out the entire rally from the day before.
Some analysts are calling it a false breakout of a symmetrical triangle, while others are screaming manipulation.
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In reality, it’s retail traders being shaken out of their positions by smart money traders who are currently controlling the market.
The analyst concludes that a divergence in retail sentiment is responsible for continuation to either side.
Essentially, once retail traders flip positions to follow the trend, it is immediately used against them.
The idea of buying low and selling high may sound simple in theory, in execution it is incredibly difficult and requires strict planning and strategy execution.
It also requires constant analysis of sentiment and a steady nominal state that doesn’t allow for flip-flopping of sentiment or chasing trends, as inexperienced retail traders are proving again and again.
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