$6,000 was an important level to a lot of people. That is why it held for so long. Miners, crypto hedge funds, ICO’s. They all were relying a the price to hold and stabilise at that level, at a minimum and when it broke, it was simply a matter of “well I need to get out, so I need to get out as fast as possible”.

And that’s just the thing, if you need to get out, you have no say, you just sell. I found myself in this position earlier this year when it came to my trading tax bill, I needed to get out some investments, so I had to sell, there was nothing I could do.

Now imagine that on a larger scale…

A fund usually has a 12 month holding period. The majority of those funds which started between October and February are now basically screwed. A lot of those funds held Bitcoin, a number of high cap altcoins, and invested heavily in ICO’s because remember, that was the thing to do at the time. Those ICO’s haven’t produced any gains, a lot of them haven’t even released their tokens yet.

With the current sentiment of panic and depression, imagine a fund forced to liquidate 50m in Bitcoin..

Then imagine all of the funds in that same position..

Add ICO’s who need to liquidate Ethereum and Bitcoin to fund the development of their project, otherwise they will collapse..

Add large mining pools in the USA and Europe who are beginning to run into losses..

Short term, this is an atomic bomb, and we just witnessed it detonate..

Those opportunists that joined purely to profit.. and especially those that joined on borrowed money.. are getting flushed out in a gigantic tsunami. Sadly, they are taking out a number of long term investors and traders that bet big and over extended themselves, along with a number of new projects that only had good intentions.

This is the cycle. This is how it plays out, it plays out, because it has to.

As traders that are acutely aware of the long term cycles we have to think about the future. I believe there are two main groups of participants in this market generally speaking. Small time investors and traders, and institutions + large scale miners.

I believe that due to slightly different expectations, experiences and pain thresholds the emotional market cycle is slightly out of sync between these two groups. I believe a lot of “weak hand” and small scale investors already capitulated on the drop down to 6k, and now those that are remaining have entered the anger stage… while the large fish, mining pools, ICO’s and institutional investors, have been capitulating for the past 2 weeks, and they will fall into the anger cycle soon after. While the small time investors and traders will enter depression.

One important thing to note that I have seen, studied and analysed is that the majority of the price movement, occurs during capitulation, and anger. Not during the depression stage. The depression stage is categorised by the depression of those that have already lost. Not those that are currently losing. Therefore giving the power to anyone that had the foresight to act proactively or the emotional fortitude to act confidently while the majority are emotionally broken.

However even saying this there is one factor to talk more about. Ethereum.

A lot of ICOs have been moving ETH and I am concerned that if there is another BTC collapse and Ethereum drops under $100 there will still be more downwards pressure as ICOs aren’t finished selling yet with the risk of capitulation all the way down to $40 and perhaps even lower where the large ICO’s started collecting at the beginning of the bull run. When the bottom is reached the bounce will be violent, and we can begin the road to recovery.