Why Bitcoins price is not rising more after Brexit, and why markets naturally rise immediately after a huge fall, and soon fall harder

In a true economic collapse situation, especially at the beginning, you have one to three days of incredible carnage, as prices fall off a veritable cliff.

Rarely does this extend to a fourth day. Instead, what people witness is a huge rally, +300 swings up for one or two days, maybe a week. And then, the collapse resumes.

Why is this? Well, it's a combination of "deal chasers" (people who foolishly believe they are getting a good deal) who try to "catch the knife", as it's called, and the phenomenon of "short covering."

A whole lot of money has been betting that the stock markets will go South. What happens when the floor falls out in an ecomonic collapse situation is that the wise shorters pull out and take their profits. The way they must do this is by buying stock. Soon, the prices rise and the "deal chasers" pile in. Many times, the central banks buy, too, in order to gin up more "deal chasers" and hopefully break the down trend, by in effect, lying to people and creating an artificial high.

However, while the smart money has been pulling out of their short positions, a whole more not-so-smart investors usually pile into more short positions, during the collapse phase. When the markets inevitably pop up (due to short covering and dumb money), these recent shorters get margin called by their brokers and are forced to liquidate their positions (by buying the stock...) at whatever price necessary. Thus, all of the dumb money shorters end up in an arms race, basically buying from each other and everyother investor happy just to get out a little ahead.

This is why you can have such big gains immediately after the start of a Collapse event.

Also, in order to cover operating losses, margin calls, and other unforeseens after a Collapse event, many institutions, hedge funds, etc., are compelled to liquidate their safe-haven positions (principally, gold, silver and Bitcoins). Thus, these safe haven commodities usually decrease or remain flat in value during the early days of the collapse. If the situation is prolonged, commodities can lose up to 70% of their value, as the institutions are forced to sell everything just to survive. This is why silver went down to $7.50/oz in 2009.

This current downtrend is a crisis of fiat. It doesn't take a scientist to realize that if the UK leaves the EU, and a trade deal is not immediately renegotiated, or if more countries leave the EU, the Euro is dead.

In times of currency confidence failure, wealth storage commodities typically do quite well. And it is far easier to spend Bitcoin than it is to spend an ounce of silver or gold.

So don't be lulled by today's highs. Think of it as a reprieve to get some money in your literal hands. Because you do NOT know if your bank will let you get it out tomorrow, especially if you're in the UK or Europe.

Submitted June 29, 2016 at 12:20AM by hopeseekr http://bit.ly/291oNgJ