December 31, 2020 falls on a Thursday, which is a perfect day for the institutions to dump all over the faces of the slow money FOMOing into bitcoin at the end of the year. Will they do it? The narrative is that institutions can't dump that quickly. That's what the shills say. Is that true?
I don't think so. You guys don't understand how quickly a company with an army of pro traders and bots can move in and out of markets.
I crunched some numbers. Feel free to check them, because I haven't done math in quite some time.
In order to get rid of $1B worth of bitcoin in a week, a company would have to dump $82,671 per second with no breaks. This seems like a lot until you consider that $82,671 is only 3.06 bitcoin. Divvy this up between 20 traders, and that's only like $4,133 per trade. Yes, per second, but you can program bots to move that fast. The point is that it's very doable.
So why wouldn't institutions, who need to report good results for Q4, dump right before the new year?
I've also heard the tax argument. Short term holds get taxed at the capital gains rate. Well, I don't care if that rate is 50% — if I make $10 million in a week and have to give $5 million back, that's still $5 million profit. Paying taxes by themselves never bankrupted anybody.
Another argument is slippage. We've all seen bitcoin move sideways for weeks at a time. These long accumulation periods are more than enough to hide the activity of a multibillion dollar whale. The 24 hour trading volume on BTC now is above $55 billion.
I'm just saying that I'm going to do myself a favor on December 31 and take a bit off the table if this week gives us a monster pump. You do what you like.
