It’s Halloween as this article is being written, and there might be nothing scarier than the “King of the Hermit Kingdom”, Kim Jung Un, smashing and grabbing $6.3 billion worth of Bitcoin in a Binance hacking incident this week, and yet it happened! What does that mean for Bitcoin in the immediate and longer-term? I will discuss this later in the article. First, watch the video I created for volume profile chart analysis.
Here is the chart that puts numbers on the volume-weighted average price control points (VWAP control points). The magenta dot-dashed lines are constructed from weekly VWAP control points, and the solid red lines are monthly VWAP control points. The green dashed line is a price resistance line.
So What Is Going On With Bitcoin Anyway?
Obviously, the North Korean Binance hack did not exactly send waves of joy through the Bitcoin universe. The other thing that likely becomes a larger issue are the effects of selling on the Bitcoin price, as now there are larger external factors that can smack Bitcoin price around in large ways.
Apparently roughly half of that theft involved unfreezable Bitcoin assets. That can send other nasty ripples in Bitcoin trading.
Once prices begin to fall rapidly, now that institutions own a lot of Bitcoin, highly leveraged Bitcoin holders have to liquidate their holdings to meet margin calls, and there is a cascading effect that can create mini-panics as those sales increase.
This incident re-emphasizes the whole the “not your keys, not your coins idea”. It is NOT a good idea to leave your Bitcoin on large public exchanges. Instead, keep them in your own cold wallet.
Will this lead to further government regulation of cryptocurrency in terms of transfers? I saw a meme last night that for some reason I lost the link to with the person commenting “wouldn’t a 3-day delay in transfers stop this?” I think that idea could gain traction now that large institutions trade Bitcoin with leverage. Your grandad’s Bitcoin is no more.
The entire AI private credit issue is causing pressure on the U.S. Treasury bond markets, forcing bond yields to rise order to compete for borrowing. You can watch this video to get an idea of the severity of this issue. The bottom line for this incident is that Bitcoin’s protocol was in no way affected by this heist. The outside economic ripples, however, could get a little crazy if the debt crisis turns catastrophic at the fringes and the AI “boom” possibly begins to turn into a bust.
The soundest thing you can do is to keep your Bitcoin in a cold wallet and to be cognizant that it could bounce like a basketball between support and resistance until these crises, economic and political, shake themselves out.
That is all I have today for Bitcoin futures. If you liked what you read, give this post a like and consider joining us as a paid subscriber. If I can get paid subscribers to 1000, I can once again turn up the research muscle and create daily and weekly lists of stocks and ETFs to investigate further. It might be just like the old days again.
Thank you for supporting the Buffalo Trader’s Writing Desk!
Soon we will have "psychocoin" completely controlled by the government and A/i bankers. All else will be ruled illegal.