What Was The Ultimate Top Signal For Bitcoin? Market Digest With Scott Melker
CryptoPotato had the chance to poke the brains of the professional cryptocurrency trader Scott Melker, perhaps better known in the industry by his Twitter alias The Wolf of All Streets.
With the market being as volatile and dynamic as it has been in the past couple of months, it’s safe to say that we had a lot to discuss.
Bitcoin Price: Is It Still a Dip or Change of Momentum?
Plenty of people are of the opinion that it’s high time we stopped calling the current correction a dip. A 50% drop from the all-time high is a considerable retrace.
“It’s a little minimizing to call this a dip. There was a significant shift in the market structure, as well as the perception of the asset and in the institutional interest towards it.” – Melker said.
However, he also explicitly outlined that it’s crucial to keep context and timeframe in mind.
“If you look at a monthly chart and the history of Bitcoin – it looks like a small correction and a little dip. If you’re looking at a chart for the past 3 to 6 months, maybe you say that we’ve entered a short bear market here, that the bull run is over and that we can start a new one in a matter of days.”
With the current landscape clearly in mind, it was impossible not to talk about China. Scott believes, and perhaps rightfully so, that what’s happening there this time “is a little bit more significant” than the countless times we saw recycled FUD.
After all, a lot of miners are migrating out of the country, and this had a direct impact on Bitcoin’s hashrate.
He opined that this isn’t necessarily bad for Bitcoin – but on the contrary – plenty of establishments are prepared to start mining BTC elsewhere in the world, using contemporary technology and renewable energy sources, and that the China mining exodus came at just the right time. With this, he believes that, in general, what’s going on right now is bullish for the network in the long run.
Talking about Ethereum, he outlined that he continues to be very bullish on it and pointed out that even though it had outperformed Bitcoin substantially this year, ETH is now down just as much.
In any case, Melker said that he had already bought the dips, but he does have sidelined capital in case Bitcoin tests the lower $20K region.
Top Signals All Over the Place
In regards to the question if we saw some clear top signals prior to the massive correction, Melker believes that leverage, though it can be good, can also be quite devastating in the majority of cases.
During the market’s parabolic advance earlier in the year, we saw numerous instances when the price of Bitcoin moved by a couple of thousand dollars in each direction, causing billions worth of liquidations almost on a daily basis.
“Leverage exacerbates and amplifies everything that happens in this market to a degree you can’t see elsewhere.”
This, coupled with inefficient liquidation engines, can easily lead to a cascade of liquidations. He brought us back to March 2020, when bitcoin crashed to $3,800 and noted that if BitMEX didn’t go into maintenance, “we would have seen literally bitcoin going to zero on their exchange because of how aggressive their liquidation engine was and because there were no bids left on the books.”
However, he did say that the clearest top signal, according to him, was the laser eyes trend. Melker prefaced this by saying that it’s not necessarily laser eyes, per se, but rather the idea behind it that price could not go down.
Bitcoin aside, right about that time, the altcoin market was also getting rather toppy, and Melker agrees with the point that DOGE-inspired meme coins such as Shiba Inu and whatnot were a clear sign of that.
Shiba Inu, for instance, became the most popular of the above, and its price skyrocketed in an unbelievable magnitude following the developments with Dogecoin.
As it’s almost always the case, though, most of these cryptocurrencies tanked in value. SHIB, for instance, is currently trading 76% below its all-time high, leaving all the investors who bought at the top well in the dust.
But there are lessons to be learned from that as well.
Memes Are Not Representative of the Crypto Movement as a Whole
In terms of advice, aside from the obvious “learn from your mistakes and don’t do it again” tip, Melker also touched on something a lot more fundamental.
Shiba Inu (SHIB), Dogecoin, and everything within that spectrum is not representative of Bitcoin and the entire cryptocurrency movement. It’s not what the industry is about.
“That’s the biggest problem for me – you see retail coming in and they never even look at what they’re buying, and end up buying some complete joke. They would lose their money and they would say “crypto is a scam! Bitcoin is a scam!”
This, he believes, is completely unrelated and has nothing to do with it.
To wrap it up, Melker told us that he has already bought the dips, but he does have sidelined capital in case Bitcoin goes towards the lowe $20K region and is prepared to keep stacking.