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102 sats \ 1 reply \ @CruncherDefi 8h \ on: Dumping a fork coin doesn't crash its price bitcoin
Her reasoning seems to assume that asset preferences of market actors are static. If you assume that it checks out, sure. But it's not a good assumption. People preferences are dynamic and even can change overnight.
Some traders might have strong, not easily shake-able belief about asset like bitcoin.
But there are also speculators and uncertain people who didn't yet form strong beliefs. Their preferences might change after seeing big dump that exhausted order books. They follow the crowd. They can get scared. They can panic sell. As price falls down liquidations can put it even further as system unleverages causing more people to suddenly change preferences.
The reasoning doesn't seem to hold under the dynamically changing preference landscape.
I agree (and I'm sure Mathilde does as well) that the market is dynamic and constantly changing.
However, I would say why people feel the way they do is not relevant. All we have to go on is what people actually do (the trades they make).
Whether you sell a coin out of panic or sell it to make a profit produces the exact same result: you transfer the coins to someone else in exchange for something else. Your motivations do not matter.
If you are speaking to how one person's trade influence other people's psychology, I would say we cannot know. You deciding to sell might make some people think the coin is worthless (maybe they know you're a legislator who knows that the coin is going to be made illegal soon) but the other side of you deciding to sell is someone else deciding to buy. Why do you assume this buy won't make other people think the coin is going to a million? (Maybe they're a famous legislator who knows that the government is going to buy a strategic reserve of the coin). Obviously, we don't always have access to this info.
Therefore, you can't assume your decision to sell will have any more effect on the market than your trading partner's decision to buy does.
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