Crypto Investing #27 – What Causes The Big Price Moves In Bitcoin & Cryptocurrencies? – By Tai Zen

what's up guys this is a ties em I'm broadcasting from a Starbucks in Boston Massachusetts okay this is the city where the world bitcoin network headquarters is that okay without James D'Angelo okay so on the other side of this camera I got my buddy JW with me again hello hello I have a lot of good questions for you yeah so JW was asking me here about some questions he had some questions about what causes the price of Bitcoin to go up so I'm gonna share with you guys my thoughts and my observation now I want you guys to know the background I have okay so I've been trading stocks futures and currencies since the beginning of 2008 so I had the opportunity to trade through the biggest stock market crash in human history okay so I learned a lot during that time and I've had the privilege of having lots and very very good traders that have coached me along the way throughout the years so keep in mind that what I'm about to share with you guys about what causes the price of Bitcoin to go up like crazy when it does okay when it does it goes up to the moon like very very quick and very rapidly and once you guys understand that what I share with you guys is based on my experience and my observation in traditional trading from stocks futures and currencies this is not from I'm trying to take what I've learned in my experience in training from the traditional asset classes and applied towards this new asset class called crypto currencies so I want you guys always keep that in the back of mount in your head right that that's where I'm gaining my knowledge and experience from so you guys are aware of it okay so before I share with you guys how the price of crypt Bitcoin runs up very quickly like it is right now from 425 in the low 400s now it ran up – like it broke above 470 as I'm making this video I want you guys to be aware of something okay in the stock market right whenever you have a big institution the only people that are capable of moving the prices in the stock market is people that have a lot of money and we're not talking about somebody that's a millionaire that has half a million dollars or million dollars in their trading account we're talking about somebody that has like ten we're talking about somebody that they can lose 10 20 million dollars and it doesn't it doesn't hurt their ability to trade okay they can continue trading their same strategy or invest in the same strategy without any problems okay so when the big institutions I want you guys to imagine how the big institutions buy and sell something okay when they are buying and selling a stock let's say that we have the the construction workers union here in Boston and they need to buy a million shares of Apple stocks for their union employees okay what they're gonna do is they're not just gonna go in there and just buy a million shares of stock right away because if they do that everybody's gonna see their order and it's gonna jack up the price as they buy it from all the bids and the air and the I mean from the ask and the offer from the people who are asking a certain price for their Apple stocks and from the people that are offering a certain price for their stocks it's gonna run the price up so what they have to do is they have to go in and buy a little bit at a time 100 shares here 100 shares there 50 shares here 10 shares there and when when the big institutions are buying stocks right they never buy at a one price like an individual like you and I like if we go in we want to buy Apple stocks we'll buy that one 21:30 whatever the price is right the institution's never buy one set price the way they buy is what we call an average price meaning that when they buy that million shares their analysts and their research team at the trading firm they establish and they make an agreement with the the the Union that the construction workers union that hey you know what we are going to do the and and and and they agree that they're gonna buy Apple stocks at $120 so when they do that what the the trading firm will do is that they will create an algorithm and create some software and what they'll do is they'll put a cap on the price and in a ceiling on the price of the stock and they put a floor in on the price of the stock and what happens is when they put that ceiling in in that florien the computer algorithms will go in and they'll buy the stocks and as they buy it it'll run the price up and on purpose they will sell the stock to run the price back down and as it comes back down they'll buy back in and bring it back up so it will cost them money to push the price back down and buy it back up so they're they pay is ping-pong game in the markets that's why you see the markets consolidate so when the market is just going sideways like this that's what they're doing something you don't see that you only see the results of it you don't see the actual computer algorithms being at work to compress the price and by within that range okay and they are willing to spend you know hundreds of thousands of dollars even millions of dollars to get the price to lock it in so that they have an average price sometimes when the price comes up and it comes up too fast and too high and it's outside their range that they want to buy that they will purposely sell the shares that they have to really quick and really fast and push the price back down so it stays within that range that they want to buy the shares at and once they accumulate their million shares they remove that algorithm and what happens is now the price of that stock can go back to its normal market price and then either it shoots up or it drops either way the Union gets their shares the trading firm gets the shares that they want and they get it at the average price that that the trading firm and the Union agrees on and they make the exchange they get paid and everybody's happy meanwhile the price of the stock continues either up or down on its natural course okay now I share that with you guys the cuz I in in in the world of stocks and futures and currency trading there's a lot of government regulation that that makes it a little bit difficult to do so you have to have a lot of money and lots of good computer programmers to create those algorithms to be able to do that and it only works in a temporarily time period and then after that they have to update the algorithm so it's not something that you can just plug in and then just let it run all the time you put it in and then you have to the team has some other trading firm has to monitor it update the software on a constant basis sometimes on a daily weekly basis but it's constantly updated it's constantly being monitored by humans there's no algorithms out there that just run 24 hours a day by itself without human oversight or human watch or a human intervention ok in the world of crypto currency trading the advantage you have is that you don't have a lot of these regulations that the government puts on to trading because it's a new asset class that's being created everybody understands what bonds are what precious metals are what stocks are what commodities what futures are everybody are used to familiar with that so everybody knows the regulations behind trading and investing in these traditional asset classes but for the crypto currencies it's a new asset class that nobody knows about the government doesn't understand it and they don't have the correct regulations and the rules on it so what happens is you have a lot of big traders that can connect the you have traders out there in the Bitcoin world that are very very good computer programmers like leon phu kham the problem is like my buddy leon phu kham he is a by the way his name is leon food we just add the dot-com i'm behind because he's really freaking nerdy ok so don't waste time going to the web site or nothing it's just we just call him that because he's so nerdy ok when leon phu kham he has computer skills and I have trading skills if we match it up we can figure out some algorithms to create the trade Bitcoin to the only problem is right now it's just for us it's a waste of time right you got to have a lot of money to trade these things to build these algorithms adjust it have coders on hand and so all that so we have people out there I don't know who okay I don't know who I don't even have the evidence to even show you guys that there are programmers out there and heavy traders out there that are doing this but what I can show you guys is what it looks like on the charts okay when you see these huge monster moves up or down in the markets in the Bitcoin market that is caused by people with lots of money it's not my people you and I who are trading half a Bitcoin a quarter of a Bitcoin or half a Bitcoin it's none of that nonsense okay it's people with millions of dollars okay and what they do is they unload the price they they they will put those algorithms in and cause the price to just stay locked in if you guys have noticed let me pull up the chart here so I can get the information correctly right if you look at a daily chart of Bitcoin and I'm looking at the daily chart of Bitcoin on bit 5x and we're looking at the daily chart okay if you guys look at the daily chart of it almost every analysts cryptocurrency analyst or trader has seen it's very obvious that it is going into a wedge pattern okay like this it's going into a wedge pattern now if you guys don't understand technical analysis a wedge pattern indicates a consolidation that means that the price is consolidating and whoever it is or a group of people usually it's guys with big money they are consolidating and they're pressing the price down to get those average price of the bitcoins that they want and if you guys noticed recently there has been a break outside that wedge now every technical analyst agrees that that wedge formation in the price of Bitcoin that wedge formation is a consolidation and what a consolidation means some people call it a consolidation period some people call it an accumulation period okay now I like to use the term accumulation because it actually describes what's going on in the markets as it's coming to a wedge okay like I told you guys those algorithms that are trying to buy those bitcoins they're keeping the price at a certain and then after they start to accumulate more and more the bitcoins that they need it compresses they they bring the algorithm prices in okay and what happens now the price is bouncing back and forth because they're nearing the completion of their accumulation phase where they acquire all the bitcoins that they need and then once they they they acquire all of the need they remove the algorithms because it's no longer needed to gain that average price of the bitcoins that they want so once they let go and remove their algorithms from the exchanges what happens is the natural price of Bitcoin automatically moves okay so now because of that right now it's going up to above 370 I mean four hundred and seventy dollars sorry about that and then once it starts to go up what happens is Bitcoin whenever it runs up since it's the granddaddy of all the cryptocurrencies no matter how much you hear me talk about etherium or any could alternatively always remember that there is a reason why bitcoin is worth four hundred and seventy dollars a Bitcoin while everything else is worth you know pennies or aetherium is worth like seven dollars which is the highest one so far there's a reason why aetherium like coin and all these are worth four or five bucks three four bucks seven bucks while bitcoin is worth four hundred and seventy dollars there's a there's a it's not even in the same league a value okay so don't ever forget that no matter how many videos you guys see me make or how many videos you see other people make online right the price there is a value to Bitcoin that's why it's four hundred and seventy dollars a Bitcoin okay versus seven dollars or or seven cents okay so what happens is Bitcoin creates what's called a wake okay a wake is when a boat or something fast cut to the water and it leaves a wake behind it and it sucks you in with it right if you guys have ever been like near a train station in New York and Boston or buy a car that goes by real fast if you guys stand there in the car the train goes by real fast it tends to suck you in with it if you stand too close and so because all these alternative currency cryptocurrencies outside of Bitcoin they are all dependent you can only buy etherium with Bitcoin you can't leave I like coin dolly coin NXT any augur anything right you everything that you buy you have to do with Bitcoin and then once you get into that alternative cryptocurrency then you can use their cryptocurrency to make the exchange but you still got to buy it with Bitcoin everything has to go through the Bitcoin before it becomes a fiat or before it becomes a cryptocurrency okay so because of that all these alternative currencies are very close they're very very tied to Bitcoin so when Bitcoin shoots up in price or goes down in price it creates a a what I call a price wake okay and that doesn't mean like you wake up it's more of like a wake like an ocean wave okay and it creates a vacuum that sucks everything in with it okay and so because of that it will suck in the price right now if you look at the history I've noticed and this is a personal observation of mine it's not a fact of anything I just noticed that when Bitcoin shoots up really big when it first start in climb and go up in price the price of the altcoins will go down in value but then if if Bitcoin continues to go up higher and higher if the all coins are to go down but then it starts to turn around and follows along with it okay and it drags it up with it okay so so I just want you guys to understand that as you guys see the price of Bitcoin and shoot up and the price of the all coins going down okay that's that's the main reason why does that help you any questions about that no I would love to know who's buying these bitcoins although the volume is only 80 million yeah so it can't be or it's not an individual yeah but I don't think it's a big bank or a big institution I actually I do believe it is a big bank or a big institution it has to be somebody that has a lot of money yeah but if the average volume is say 40 50 million dollars a day yeah it's only 30 million above which is a pimple okay so here's the thing you see only 70 80 million dollars of a Bitcoin being traded each day but how long has it been trading like that how long has it been trading like yeah yeah months yeah months right yeah so this thing think about it if you and I buy or sell a Bitcoin right we might buy one today someone tomorrow we buy five today sell half two and a half tomorrow the amounts that we buy and sell are so small that it's not worth mentioning right but there's 80 million 70 80 million of it being traded every day who's buying all that it's got to be somebody with big money and what they're doing is like because there's a lot of Bitcoin projects that's going on out there and there's people that's doing private projects we only hear about the public projects that people work on like r37 those places like that but what about all the private projects that no one talks about I mean not everybody's gonna release what they do and if they build their project on top of the Bitcoin network on top of the Bitcoin blockchain guess what they need to run it Bitcoin Bitcoin and there are people out there that I believe I don't have any evidence of it but I believe that there are companies and businesses out there that are building Bitcoin projects and Bitcoin applications that are very powerful they need money they need not just money but bitcoins to run their projects so because of that they're buying a little bit a little bit a little bit here and there and then they're testing it internally and then when they release it to the public they might need all those bitcoins and stuff like imagine if you're the New York Stock Exchange or the Nasdaq exchange the Nasdaq has already tested some over-the-counter stocks being cleared and settled on the New York I mean on the on the Bitcoin blockchain so you when they do that test and do you think they're gonna do with one or two bitcoins no they're probably gonna need a few so they're gonna accumulate some and just put it there and for them to buy up a hundred or a thousand bitcoins that's nothing to them see to us it's a large number but to the big institutions that is nothing for them to buy a million dollars worth of bitcoins that is nothing to them that means nothing you look at the Winklevoss funds these these Bitcoin funds that people are starting up for them to buy five or ten million dollars with a big is nothing to them I mean they're there Tata the investors that invest in these funds in America you have to have they have to be a millionaire and net worth of a million and they have to be what's called an accredited investor meaning that they have to have a million-dollar net worth and they have to have an income of $250,000 a year to invest into these funds right that's my law in America that's not my rules or your rules that's an American law but you have to have that kind of money in order to invest in these types of hedge funds and if these hedge funds are buying like if you're an accredited investor and you give these hedge funds $200,000 or half a million or a million dollars and if they collect that from like a hundred people do you think they they can move the market do they can move the markets so easy it's not even an issue and that's the thing is that individual traders at home it's hard for them to imagine it's hard for them to imagine those large numbers 10 20 50 it's even hard for me to imagine you know but for these big institutions and hedge funds that means nothing to them you know and that's why I believe that that's what's happening and that's and we'll see we don't know but that's what happens in the stock market and I believe that there's no I believe that's the same thing that's happening whenever we see that consolidation that's what's happening in the Bitcoin market you know so if you guys like these type of videos guys give me a thumbs up you guys don't like it give me a thumbs down you guys haven't subscribed to my channel already make sure you do if you guys have any friends family or colleagues that are interested in investing in the cryptocurrencies make sure that you invite them to check out my channel and subscribe to it and I'll share any new information I come up with with you guys all right thanks for watching this video and I'll see you guys in the future video

6 thoughts on “Crypto Investing #27 – What Causes The Big Price Moves In Bitcoin & Cryptocurrencies? – By Tai Zen”

  1. Totally random request not related to this video Tai, but can you make a video on what the BTC Relay is all about and what it means for the crypto industry? Thanks buddy and great videos.

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