The performance of Bitcoin and the broader cryptocurrency market is more akin to
“Pink sheets” is the nickname of highly illiquid stocks that trade only over the counter as they don’t meet the requirements to be listed on a major exchange such as the NYSE. They are highly speculative and also quite illiquid, leading to potentially violent price swings and prone to manipulation.
Cryptos today make me think of the new pink sheets as they share many characteristics: unregulated instruments, highly speculative, have now become highly illiquid and easy to manipulate. There has always been thousands of valueless and meaningless coins, pumped by unscrupulous insiders just before dumping them on unsuspicious hopefuls seeking a “get-rich-quick” schema, but nowadays, even the large-cap cryptocurrencies begin to behave as pink sheets, essentially due to a lack of liquidity.
For the most recent examples, if we just focus on the largest crypto, and also the most liquid, i.e. Bitcoin: it has been almost frozen since June 24th, but jumped on July 7th, 2023 on XRP half-victory against the SEC news, only to dump by an equal amount the very next day, before sliding very slowly , then violently crashing 10% on August 17th, 2023 in less than a couple of hours.
Bitcoin has behaved all Summer as a pink sheet: going nowhere, then suddenly moving up, then fading the next day or dumping without bouncing back.Liquidity was initially been brought by large institutions diving into cryptos, but these large investors turned cold feet as the 2022 bear market unraveled and FTX was the last nail in their crypto coffin. They haven’t come back yet, hence the lack of liquidity in the market.
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