'The individual patterns are all similar: the market is in a state of equilibrium, then something happens -- always accompanied by significant volume -- to move it quickly to another state of equilibrium. The cycle repeats.'
Nevertheless, it goes without saying that every new month differs from previous months. The most striking aspect of the May chart was the steady rise from 5000 to 7000 (in round numbers) during the first third of the month.
The subsequent jumps/drops in the 'state of equilibrium' occurred at the following (approximate) times, always confirmed by a surge in volume:-
2019-05-13 0800 +
2019-05-17 0800 -
2019-05-18 2000 +
2019-05-26 1200 +
There was another drop near the end of the month, although its price movement was only about half of the movements I've listed. Cointelegraph's Analysis category served three stories that I found relevant. The first story concerned a small jump early in the month, accompanied by an outsized volume:-.
- 2019-05-04: Bitcoin Surges Past $5,700 in Hours: Experts Explain Factors of Overnight Rally • 'Over several hours on May 3, the price of bitcoin spiked from around $5,300 to over $5,700 in major markets, allowing the crypto market to gain more than $7 billion in a single day. [...] Crypto Rand, a widely recognized cryptocurrency trader and technical analyst, said that the upside movement of bitcoin and the rest of the market may have been simply technical.'
'Crypto Rand' - is that a real name? 'Simply technical' - is that a real reason? My interest in the second story isn't about its title; it's about its trigger:-
- 2019-05-26: Will Bitcoin’s Volatility This Month Hinder the Future of an ETF? • 'On May 17, bitcoin’s (BTC) price experienced a "flash crash," dropping to $6,400 within minutes, which was triggered by a 5,000 BTC sell-off — equivalent to around $35 million at the time.'
A 'flash crash' is caused by automated trading. Note that the drop was deeper than shown in the monthly chart above, because a partial recovery happened almost immediately. The third story is an eye-opener:-
- 2019-05-31: Bitwise Calls Out to SEC: 95% of Bitcoin Trade Volume Is Fake, Real Market Is Organized • 'Bitwise has recently prepared a 104-page white paper. In it, the fund manager argued that the bitcoin market still has inconsistencies regarding trading data, but the legitimate part of the market has a "remarkable efficiency." • Approximately 95% of reported BTC trading volume is fake • Bitwise analyzed trading data of some 83 exchanges. Researchers said they looked at the trade size histograms, volume spike alignment and spread patterns of these exchanges. They concluded that there are only 10 exchanges with 100% real trading volumes, and these 10 exchanges collectively account for 5% of the reported trading volume. • The remaining 5% makes up for a highly regulated and efficient market.
There was more about an ETF, which isn't relevant to understanding sudden price movements. It's the 95%:5% split that is relevant. Automated trading on suspicious data -- isn't that a dangerous combination? Given that bitcoin is traded all over the world, which means that it can escape any sort of regulation, and given that pots of money always attract fraudsters who are only interested in the size of their own bank accounts, why would anyone trust bitcoin? Maybe because it's a fascinating idea.
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