Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with it when collapsing.
There's some magic number for the price of Bitcoin, and it's hard to say what it is, where the miners start to lose money. If it stays too cheap for too long, it puts pressure on the miners to either switch to other coins or get out of the game entirely.
Things could get very bad, very quick. The only reason I don't have a bearish position in Bitcoin is that I can't find a counterparty that a.) I can afford at my account size (eg not CME) and b.) that I'm confident will still be around after this crash.
Stay cautious. Happy trading.
You would need to keep a small amount of ETH to operate the smart contracts, which could fluctuate in dollar value, but even after a black swan event, there's no reason that this decentralized infrastructure would not still be running, allowing you to redeem the USDC to real dollars.
[1] Circle dollars, 1:1 backed stablecoin from a well regulated issuer.
Also we've been there (mtgox's willy etc). I don't think bitcoin will be much less volatile any time soon. https://www.youtube.com/watch?v=XbZ8zDpX2Mg
People trying to get out of USDT into BTC because the USDT:USD parity assumption collapses will boost BTC:USDT prices, but probably not enough to avoid dropping BTC:USD, because it would be less than the USDT:USD drop, is the idea.
Thise specific USDT pairings would crash. If they wanted USD (as they presumably do), they’d then crash the other stable coin or backed pairings.
In the same way that there's no obvious ceiling to its value, if a lot of people try to get out of it at once, there's no obvious floor either.
Basically the market cap of BTC is not relevant here, but rather the daily volume.
Well, it will be an interesting week for sure.