Let's Take a Deep Dive into the Crypto Blood Bath: Here's What Happened.

If you're keeping an eye on the crypto scene, you've probably noticed that in the past 24 hours, the market has experienced what many might call a bloodbath. The turmoil commenced when Bitcoin's value plummeted by over 11.11% within just a few hours, triggering widespread panic throughout the crypto sector ($148 billion vanished).

In this article, we'll delve into the factors that triggered these events, aiming to provide readers with a clear grasp of the market dynamics. Furthermore, we'll explore some key takeaways from moments like these – insights that often get overlooked due to the overwhelming emotions that arise after significant financial losses.

Mass Liquidations Across Crypto

Data shows that a staggering 176,752 traders faced liquidation in the last 24 hours. Surprisingly, 90% of these liquidations occurred within the past 12 hours, highlighting a swift surge in price volatility merely days after BTC and ETH registered their lowest daily volatility in several years.

The billion-dollar liquidation stands as the largest event of its kind in the past 8 months. This event follows a similar occurrence during the FTX collapse.

SpaceX Dumps Bitcoin

In a recent report from the Wall Street Journal, SpaceX, led by Elon Musk, has decreased the value of its bitcoin holdings by a significant $373 million. These buys originally happened in both 2020 and 2021. The report also mentioned that SpaceX has sold some of its bitcoin, although the exact timing were not provided.

It’s important to note that a degree of uncertainty prevails, as no one can definitively confirm the exact amount that was sold due to the report's phrasing. We’re still awaiting to see if SpaceX or Elon Musk will confirm this, however.

Elon Musk had previously mentioned in 2021 that SpaceX owned bitcoin, but the specifics were unclear because the company is private. This latest news sheds light on the financial side of SpaceX's involvement with bitcoin.

This news come as more and more entities lose faith in Bitcoin, and begin to steer away. MicroStrategy was forced to sell some of theirs after facing major losses, Tesla pulled out after seeing its payment flaws, and El Salvador’s usage has dropped by nearly 99%, with virtually everyone going back to fiat to transact.

To me, it comes to absolutely no surprise that Elon Musk got rid of their Bitcoin, which we had actually advised him in a series of tweets back in May 2021, when Bitcoin was above $60K.

The takeaway here is that Bitcoin Maximalists really pushed the idea that "Elon Musk backs Bitcoin, so you should too." But like all untrue narratives, they fall apart when the real facts emerge.

I believe investors should stick to the actual information. This situation was destined to go wrong, especially since Elon's numerous public tweets revealed his uncertainties about Bitcoin. When influential figures declare they're buying something, it shouldn't catch you off guard or affect your choices. By the time the news reaches us, months have often passed since the purchase, and the market has already adjusted. It's only when they sell that you might need to be concerned, which is exactly what happened here.

SEC Bitcoin ETFs Delayed

A notable development has also emerged on the Bitcoin front: the SEC's decision to delay the approval of Bitcoin ETFs until 2024. This decision holds significant implications, as many predicted with utmost “certainty” that it would approved within the next few weeks or months.

This delay challenges the predictions of many experts and gurus who had anticipated a different outcome. Their projections, often seen as gospel in the crypto community, did not align with the regulatory reality.

As many know, we actually took the contrarian approach and predicted this delay would happen in our paid newsletter article back in June 2023. See below:

In essence, this SEC delay serves as a reminder that even the most well-versed predictions can be rendered moot by regulatory actions. It highlights the importance of staying informed about both market dynamics and regulatory updates to navigate the crypto landscape with a clear perspective.

While there is a chance the SEC will reject these ETFs, our analysis shows theres a 95% chance of approval by January 2024, and upon approval, we would likely see a drop in prices.

Nonetheless, this situation provides an opportunity to observe the influence of exaggerated optimism and misleading stories. It also sheds light on how maximalists employ misleading tactics to attract retail investors.

Tether & Evergrande Collapses

Last Wednesday, China Evergrande filed a petition for Chapter 15 bankruptcy in New York, marking a significant step amidst its ongoing financial challenges.

While this news might have gone unnoticed by many in relation to the crypto world, I believe it's closely tied. To briefly explain, the stability of the markets largely hinges on a stablecoin named 'Tether'. Recent revelations confirm Tether's position as one of the top buyers of Bitcoin, a fact they've acknowledged themselves.

Despite the lack of transparency in Tether's underlying assets, they do admit to holding Chinese commercial papers, providing no further details. A popular theory suggests that these "Chinese commercial papers" might actually be linked to Evergrande, given Tether's considerable hit following the onset of Evergrande's failures.

With Evergrande's bankruptcy filing, a sense of fear seems to have re-emerged in the markets. This is evident through the actions of major whales who are quickly exiting the scene to prevent the potential spread of contagion. Additionally, Tether has been beginning to offload their Bitcoin holdings in an attempt to maintain its peg, inadvertently contributing to the ongoing market decline.

XRP wipes out all gains

Nearly all gains from the July XRP rally have been mostly reversed, following their recent victory against the SEC. This has been the case with several other altcoins as well, as they took a major hit following Bitcoins nosedive.

If you’re in the financial markets for long enough, and maintain a logical approach, you will notice a common trend: significant surges are almost always followed by substantial declines. These shifts are a result of human emotions and market psychology.

Intense greed drives prices to unparalleled heights. Yet, reality eventually sets in. A period of stagnation occurs, followed by the grip of fear. Traders recognize that they entered the market at excessively high prices and rush to sell, triggering a domino effect of liquidation and panic.

This is why I consistently advised my followers through both X and my Newsletter to secure profits. I emphasized the perils of FOMO (Fear of Missing Out) and the risks tied to investing in XRP as it approached the dollar mark.

Despite the recent downturn, there's no need to worry. Seeing the market drop like that can trigger a range of negative emotions, but I think many of it is unwarranted, especially if you focus on the long-term.

In fact, I see this as a prime opportunity, and investors should be ecstatic.

Similar to cashing in gains after the July surge, making acquisitions after a significant drop is a wise move. While I intend to monitor the market's true condition and any imminent news, focusing on accumulating assets seems prudent for all of us.

Learning from Recent Crypto Market Turmoil

As mentioned earlier, we want this article not only to focus on the news but also on how investors can learn from it. We understand that many reading this have likely experienced some losses, as the majority of the crypto space has, but there's nothing to be ashamed of.

I've always said this, but you've truly only lost if you make a bad trade and don't learn anything from it. If you learn a lesson, you haven't really lost.

🌟 Emotional Resilience: Cultivate emotional resilience to maintain a clear-headed approach despite extreme price swings that evoke fear and greed, impacting decision-making. It’s important you recognize when you’re making a decision based on emotions, rather than logic.

📚 Thorough Research: Before making investment choices, prioritize in-depth research and due diligence to avoid FOMO-driven decisions. On our website, whalewire.org, we have a free completely free guide for investors that provides all the knowledge you need to know to be successful.

🌐 Diversification Strategy: To reduce the risks with sudden market downturns, spread investments across various cryptocurrencies and assets. If all of your funds are invested in a single shitcoin and it plunges 90%, there's no other way to put it—you're fucked.

🤝 Influence of Influencers: While high-profile endorsements matter, ensure to verify their advice through thorough analysis and research. Lots of these cryptocurrency “gurus” have terrible insights, and are just there to shill you ponzi schemes and steal your hard-earned money.

📜 Regulatory Realities: Stay informed about regulatory updates as regulatory decisions can be unpredictable. Base your decisions on a clear understanding of the regulatory landscape.

📊 Market Psychology: Adopt a rational, long-term investment perspective by recognizing the cyclic nature of market trends driven by emotions like greed and fear.

🧠 Learn from Mistakes: Use losses as learning experiences to refine investment strategies and become a more informed investor.

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🔮 Crystal ball time: Do you foresee a cryptocurrency rebound, a continuation of the turbulence, or something entirely unexpected?

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