Lately, a few notable price spikes and price drops in Bitcoin have been happening when trade volume is low. For example, 4 am PST, and 7 am EST.
Not all significant price action is happening at these times, but a few of the notable price decreases and increases since March 2018 have fit this pattern. I started noticing the trend pick up in March.
This makes sense as low volume means less resistance, which means if either buying or selling is heavy in those times (for any reason), the price is more likely to be moved by it.
The jumps tend to be big when there is 1. News driving the increase or decrease or 2. a lot of shorts and stop buys, or lots of longs and stop sells, built up (which tends to happen after a period of stagnation).
Two notable examples are March 5th (a big drop) and April 11th (a big increase).
On March 5th longs had to cover positions and stop losses hit as “the Binace FUD” spread. On April 11th shorts got taken to the cleaners in an epic short squeeze as “An Islamic scholar declared bitcoin permissible under Sharia Law.”
This is neither good nor bad, although it may feel bad if it worked against you; it just is what it is.
The point isn’t to pass judgements on this or to try to figure out to what extent this is intentional, it is simply to become aware of it so it doesn’t catch you off guard.
If you live in the U.S. you have to be particularly careful, as a lot of these moves are happening when most on the West Coast are still sleeping (I’ve noticed this one first hand).
Thus, it is good to account for this in a strategy (for example by using stop buys and stop sells, or by using a bot, or by saying, “it doesn’t matter, I’m HODLing”).
However you deal with it is up to you, I just wanted to note it here. Noticing little patterns can give you a big edge.
The moral of the story, don’t sleep.
The moral of the story is, if you live in the U.S. (especially on the West Coast), make sure you are prepared for big moves in either direction before you crawl into bed for the night.
As we can see on March 5th, those who set stop sells saved up to $1k per Bitcoin, and on April 11th, those who set stop buys made up to $1k per Bitcoin.
Although stops can sometimes work against you (when it goes just low enough to hit your stop then goes right back up again). $1k is an amount worth considering.
NOTE: Stop buys and stop sells carry risks, are subject to slippage, and can result in fees. Make sure you know what you are doing before you start playing with stops! Remember, you can tier stops (like set a few of them at different price points). Learn more about stop orders.