Thread by @AlamedaTrabucco

FWIW this is the sort of move which hasn't happened in quite some time:
- big moves have basically all been driven by liquidations lately
- ESPECIALLY "low-liquidity" ones such as on weekends

So I think looking to data for the answer about what to expect as the weekend wraps up and liquidity increases is misguided -- intuition is likely gonna beat it.

What does intuition say?

Let's think about the features which distinguish this move / set of market conditions from other ones.

First: low liquidity and low volume.

The fact that there's low liquidity means that the amount of net buying or selling pressure to move the market is lower than usual -- in this case, we've needed less net selling than usual to move the market down.

And the fact that there's low volume means that it's *possible* that the transactions which have actually occurred during this weekend have very little to do with the market's average opinion!

If you imagine that, on Monday, 3x as much volume will trade as did during this little crash, it's clear that there's a TON of room for that volume / those MIA market players to have a really different opinion than "this is rich here, let's sell."

It's impossible to say a priori how different -- they might even wanna sell even lower! -- but I think it's pretty predictable that it has more propensity to be unrepresentative than if there were 3x as much volume this weekend.

So, I think low liquidity/volume combine to mean: this dip is not really what "the market" thinks is right, and is really just what a smallish fraction thinks is right. The broader market might wanna sell more or buy it back, who knows! All I specifically expect is elevated vol.

Another big difference: low liquidations.

Note: back when BTC was kinda bouncing around between 3k and 15k for a while in 2019 or something, this was closer to how most moves looked. Liquidations mattered, just more rarely.

It's predictable that we're in a low-liquidation zone of sorts. Tons of liquidations happened the other day from 40k -> 30k, and you'd basically think that anything that will get liquidated around here already did. OI stabilizing supports this!

Over time more new contracts will get opened, but this *just happened* -- it would be hard for a ton of liquidations to happen from a second drop to near 30k. This means that, unless things REALLY nosedive, we won't see these cascades for a bit.

This inherently removes a LOT of the momentum the market has been exhibiting -- there won't be a lot of forced selling on the way down or forced buying on the way up until we get out of this zone, or until time passes and OI goes up again.

So! I think this means the magnitude of moves we see -- especially as liquidity picks up and it takes more net buying/selling to move the market again -- should be *smaller* than we're used to, since the giant moves largely happen off the back of liquidations.

So, in combination, I think there's a strong chance for markets to move once the rest of the liquidity comes back (no strong opinion about direction), but the fact that we're not in a liquidation zone means that I'd expect the magnitude of the move to be smaller than recent ones.

... which is sorta a vague and not especially groundbreaking prediction, but that's what happens when all I get to rely on is intuition.

Looking forward to seeing how it plays out!

Oh oops I meant to post this as a RT of this, IDK what happened.

https://twitter.com/SBF_Alameda/status/1396466775361945601?s=20