 Hi, my name is Leon Roeb currency trader and trading coach at trading 180.com and in this video I'm going to explain why Bitcoin went past its $30,000 level really kind of blew past it and it's all to do with liquidity and Value just because something is at a high doesn't mean that something is expensive and just because something is at a low doesn't mean it's a bargain or you know a cheap price and and Liquidity is one of the main Drivers of price whether you know, you know it or not. It's fundamentals risk sentiment and liquidity are the three main things that drive price and Before we get into understanding the liquidity side of things The first thing we must understand is value value is not price and price is not Value it's very hard to determine that the true value of something a intrinsic value of something based on its price And looking at a price chart and really what smart traders do what? You know Well retail traders don't tend to do this institutional traders do is they determine current and future value whether something is expensive at a fair value or bargain prices or Bargain by understanding the fundamentals behind the asset that they are Attempting to buy or even sell but we're focusing on buying at the moment So stop fundamental analysis that some of the things are you know that traders will look at fundamental traders will look at To determine values revenues earnings return on equity etc Currency fundamentals are driven by central bank monetary policies Government fiscal policies and which is based on really GDP in the business cycle So whether we're in a recession or whether we're in the boom phase And that is driven by inflation and interest rates commodity fundamentals are driven by supply and demand macroeconomic factors And that is usually driven by things like you know risk on or risk off sentiment or even scarcity And in the case that we're talking about with Bitcoin fundamental analysis the narrative around Bitcoin and why? Traders and investors are getting into Bitcoin is that it is a hedge against inflation and is a store of value so Understanding that and understanding why you should be buying something based on fundamentals and not price Yeah, then you can understand where potentially I guess At all-time highs why something may not be considered expensive at an all-time high so What is liquidity so you hear this word Bound around recently especially you know in the last year or so online. It's all about liquidity liquidity liquidity Da da da da da, so liquidity, you know defined according to investopedia is It refers to the ease at which an asset or security can be converted into ready cash without affecting its market price What that actually means on a price chart is the amount of buy or sell orders that there are in at any, you know price point so For as an example of this if you have a large institution that wants to buy You know Bitcoin you have to and it's let's say for example They want to place a million dollar a million pound order Which is basically broken up into maybe smaller orders. What is known as iceberg orders? You can research that But there needs to be enough if they want to buy there needs to be enough sell liquidity there needs to be enough sell orders at a Certain price point for them to facilitate the buying that they want to do yeah And it is not enough liquidity for them to buy. Yeah, there's not enough sell orders. There's not enough Retail looking to sell So that they can buy Then the market will look for wherever the liquidity is now at all time highs or obvious levels of support and resistance There's lots of liquidity lots of liquidity going on, right? So we have new traders Who are looking at obvious levels? For example, the obvious level was 30k. Why was in the why was it an obvious level? And it's really because you had the Media were talking about this $30,000 level right so 30k and fortune in you know This is money Bitcoin on track for its longest monthly winning streak in more than a year as price edges closer to $30,000 Bitcoin could hit $30,000 in 2021. So $30,000 dollars was a level that pretty much lots of traders and Investors were looking at now at any All-time high or obvious price point or all-time low or any kind of key level Yeah, there's lots and lots and lots of liquidity from two main traders There'd be new traders looking to enter into new trades and also profit-takers. So the smart money for example Yeah, if you bought down here 20k Yeah, I should say if you bought down here, right you were a new trader down here and Where are you likely to potentially take profit if the media are saying that it could possibly get to 30k? You're gonna have a 30k profit target, right? You're not gonna want this price to kind of reverse before it gets to 30k or just there or there abouts right so there's profit-takers and if you've bought down here if you buy Yeah, if you buy your take profit is a Seller yeah, that's your take profit order is a sell order. Yeah, let me just pass you blame because sell order here Yeah So you've got buy orders and you've got a sell order So profit-takers are taking profit here sell orders in and around here You've got also new traders, right? So smart money would have been buying down here Maybe taking some profit here potentially potentially not but at this 30k level. Yeah, you've got new traders now new traders We tell tend to generally want to short into a what is known as a trending market and Again, this is the lack of understanding potential Value just because something is at an all-time high or at a major high Doesn't mean that that's where you should be shorting Yeah, because really understanding supply and demand and liquidity is understanding where There is going to be more supply or more demand in that area And if there's more demand in that area then supply then prices will rise And if there's more supply then demand then prices will fall, but you will never know at Levels, yeah, or you don't really have an idea. Yeah, why you should be buying or selling unless you understand the Overall long-term value of what you are looking to buy Yeah, so there are new traders who are looking to do what short at 30k and that adds more Sell orders. Yeah, so they're trying to you know time the market time the highs and get short but When you have Lots of sell orders, which is basically what we know as liquidity Yeah, and retail is selling who is on the other side of the buying Who is on the other side of the buying has to be institutional, right? Trading generally is a zero-sum game for someone to win someone else has to lose There is always someone or another entity on the other side of your Buy or sell order, right? So when you place a buy trade on your broker, your broker is forced to sell to you at that price And when you sell your your broker is forced to buy back at that particular price if you're in a profit So 30k was a psychological level. It was a level with a lot of liquidity now If retail generally are looking to sell and retail generally don't understand value Yeah, then what was going to potentially what was likely to happen who was taking the other side of these sell orders And who was doing a lot of buying at this area You guessed it it was retail and smart money hence the reason why you had Prices keep going higher because that provides retail provide the liquidity or they can provide the liquidity for the Institutions to look to buy and they push prices higher Yeah, because they understand potential value And what they're buying and they're buying for the long term does that mean that price is going to continue to go higher? who knows nobody knows but if The institutions are buying in and around certain key areas Prices continue to go higher. Of course, it's gonna be pullbacks Prices might even come back and go below that area, right? Which is what is known as potential stop-hunt, but if they are right about the future value So for example, they have you know a year two years five year forecast ten year forecast for example Then buying at 30k. Yeah is going to be Advantageous if they think that for example Bitcoin in the next year may reach 100k 200k They're not worried about certain price points and one thing for sure. They are definitely not shorting. Yeah at certain areas Just because of a technical pattern. Yeah So liquidity at highs and lows are There's lots of liquidity at all-time highs and all-time lows because there's a lot of eyeballs on it. Yeah, so Smart money will do what they do Buy into liquidity hence the reason why you have Prices going again higher said that they have enough liquidity to buy at these Areas also as well, you're gonna have traders being stopped out So they put their stop-loss, right? If you if if traders are getting Short here, for example, this is sell order. Yeah, their stop-loss is also a Bi-order and that as their stop-losses get triggered that also creates more Demand and more buying. Yeah, so everybody's stop-losses was up here being triggered by price and that Creates demand. Yeah, this is what is known as as a stop-hunting, but it's all about understanding Value and I had a video on this On my YouTube channel talking about Same thing exact same thing happened with gold for example, right and if we go to a gold Price chart, right? We were talking about this back in July August and there was a psychological level I think it was 1920 right and in the video I speak about just before that happened why The exact same principles and why gold eventually went above that. Yeah. Now one of the things you want to do is If you're time trying to time a reversal is wait for proof of You know value and what I mean by that is wait for the market to prove that a price point is expensive rather than just looking for a Reversal at a key level so wait for the price to actually Move to the downside much move to the downside like this Yeah, really prove that this is an expensive area like what's happened with gold in the in earlier this year this price point here 2075 is seen as a recent expensive area and You've seen something like this now again fundamentally if you want to be a Buyer of gold then you're not looking at this area of this all-time hire, right? You're not looking at what you're looking for is actual pullbacks But let's say for example prices come up to here and then the fundamentals of gold change Can't see it happening anytime soon with all the money printing that's going on and inflation potentially into 2021 and Beyond but when you have Prices do get up here and if the fundamentals have changed for gold Then that is where you may potentially want to get short. Yeah Bitcoin let's go back to the all-time high from 2017 Go through this again same exact thing happened So we had an all-time high of nearly 20,000 and you can go back through the the media I go back through Google and 20,000 was being spoken as as the price at which, you know Psychological level will build bit Bitcoin, you know go past 20,000 level. What happened was Is again the same principles you had traders Right, so you had new traders Getting short at this 20,000 level, especially when seduced by price action not understanding bitcoins Maybe true value as being a safe haven. What was happening? You had Profit takers as well Right all looking to do what and all in seducing Or or the liquidity was sell orders right profit takers who were buying from maybe, you know, 1300 141500 Looking to take profit at a psychological level that's selling new traders getting short that selling Not understanding that they were providing the liquidity Yeah for the institutions and smart money and you know fundamental traders who understood fundamental investors who understood Where the value of Bitcoin may want to go so they provided the liquidity Right, so when they were selling who was doing the buying at 20k? Smart money and you can see what pretty much happened the same Situation happened at 30k so again Just understanding all-time highs Isn't enough to just want to sell a market the key to this is looking to Know why? Fundamentally your you want to be a buyer of that asset and then Simple thing to do is to just wait for pullbacks into the man zones right and That's what we look to do shorting at all-time highs is really Really a fool's game if you don't understand the fundamentals and you just looking at price anyways guys I hope that helps and next time Bitcoin does reach an all-time high or you know the next 50k level or 40k level that is being touted don't just you know want to or look to To short that area whether it's on gold whether it's on you know Tesla the same thing was done on Tesla as we know There were so many traded looking to short and look what happened You can see the same thing on you know the the Stocks stock indices the S&P 500 for example this year, you know prices have made new highs So Understand why fundamentally you want to be a buyer if prices get to all-time highs and the fundamentals have changed Yeah, then Maybe consider shorting, but if you don't understand the fundamentals then I would probably just stick to understanding You know a different strategy a technical strategy, whatever it is if you don't understand fundamentals I think you should basically get to learn fundamentals as you're really kind of trading blind anyways guys, I hope that helps and all the best