5/17 ANDY HOFFMAN (CryptoGoldCentral.com): In One Of Its Craziest Moves EVER, Bitcoin Successfully Re-Tests The Hoffman Line
Nine days ago, when Binance was hacked, I wrote that the most significant takeaway would be whether or not the Hoffman Line (the $100 billion market cap level, where institutions enter and exit Bitcoin) would hold…
“In my view, THE MOST IMPORTANT FACTOR OF ALL is whether the Hoffman Line holds – which thus far, it has done like a champ. Smart investors know better than to hold significant balances on exchanges, and that no exchange is worth deifying. Moreover, the hack was just 2% of Binance’s reserves, so no investors will lose money – and as a result, the entire industry will learn from, and massively upgrade, its cumulative security.
If the Hoffman Line holds, which my early bet is (for whatever it’s worth), it will officially indicate, in my view, the commencement of a generational bull market - as unquestionably, it will show that crypto has matured enough, that investors realize this is not a Bitcoin or crypto issue; or even an exchange issue; but, like Bitfinex/Tether before it, a BINANCE issue.”
The price, $5,900 at the time of the hack, fell to a low of $5,658 – i.e., EXACTLY the Hoffman Line; IMMEDIATELY rebounded…and then took off on an eight-day explosion, to nearly $8,400. Initially, it was a Bitcoin-centric rally – but when it became clearer Binance would come back online (which occurred two days ago), altcoins rapidly caught back up.
Nothing ever goes straight up – though at times, crypto feels like it. Thus, when last night, prices started violently plunging, I suspected something seriously ugly had just emerged, as far as market-moving news. To wit, Bitcoin plunged from $7,750 to as low as $6,178 on Bitstamp, in less than an hour – much of it, in the final minutes.
As I tweeted amidst it, even for Bitcoin, this was insanely volatile action – so chaotic, that at its apex, bid/ask spreads briefly widened to hundreds of dollars.
https://twitter.com/Andy_Hoffman_CG/status/1129223692209156096
At $6,178 – which none of the other exchanges approached, the price was still $500 above the Hoffman Line…and in hindsight, the below explanation below seems as good as any. In other words, no “bad news” had occurred – but instead, Bitcoin was simply exhaling, in characteristically Bitcoin-like fashion.
"This last drop was likely caused by a combination of profit-taking and also algorithmic trading compounding the swift fall,” said Jehan Chu, co-founder of Kenetic Capital. "We can expect these types of steep rises and drops to continue for some time until institutional investors grow market volume."
Anything can happen in crypto, of course. However, the way I see it, what occurred last night, was merely a successful re-test of the Hoffman Line.
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