Market Manipulation, Night Effects, and Huge Day for Method

It has been a few weeks since I updated about my BTC method. Despite BTC having recovered from $20k to $27k, it couldn’t be going better.

I shorted BTC at $28.3k before the market open at around 6:00 AM PST. This was on the day of the FOMC meeting, which was yesterday. I also went long QQQ, as per the instructions in equal size, at the same time. I got the necessary indicator before the market open of BTC being weak relative to QQQ, which is the signal to short BTC and go long QQQ.

So what happened? BTC crashed as much as 6% yesterday whereas QQQ was down just 1.4%. Very profitable day. This was my third most profitable day, second to the FTX failure and SVB failure, in which BTC crashed 10% those days. The weakness before the open portends to much more weakness intraday, when I have the trade open. This means BTC is in the death drip of hedge funds, so weakness is assured and profits for me. At 1-1:15PM PST the positions are closed. Done.

You can see above how dramatic it was. BITO, in blue, which is an ETF that is like a proxy for BTC, closed down 6%. QQQ, in black, down just 1.4%. Notice how BITO gaps up today. Was I caught short? No, because I had closed it already. I got out at the very bottom yesterday at the close, as per instructions, realizing maximum possible profits.

I am now running it again today, and up again. As long as I keep my trading to this narrow window, I still profit even though BTC recovered from $20k to $27k. This takes advantage of the tendency for BTC to be stronger at night and on weekends.

The so-called ‘night effect‘ for stocks is a statistically-robust empirical observation that has held for decades, but it does not work as well anymore. A similar effect for crypto possibly exists too. This seems to confirm my theory that hedge fund accumulate at night and churn or sell on weekdays to take advantage of liquidity and earn commissions. Perhaps buying at night may generate a mark-to-market gain that is booked at the open, and such paper profits can be used for various schemes [0].

But this is more than just blindly making the same trade every morning: I am also combining it with the signal before the market open to tell me whether to initiate the trade or not. This makes it more accurate, because you don’t want to be shorting into a wall of strength. You want to be capturing the weakness from hedge funds selling BTC during market hours.

In the bigger picture, it means 2022’s losses from the 3x funds and Tesla has been recovered, thanks to the huge gains so far for 2023 (like with META stock) and running my method, which saved me from a bad 2022. I was not expecting to recover those losses until 2025 (assuming the bull market continues). I had skipped 2-3 years. So that is really awesome.

[0] As an example of such manipulation, let’s say you have a neighborhood of nine homes, each selling for $1 million, arranged in a 3×3 grid. The person in the middle agrees to sell his home for an artificially inflated price, say $2 million, to a buyer, who accepts. It’s booked as a sale as far as sites like Zillow and appraisers are concerned. Behind the scenes, the sale is undone by the seller, who is in on the scheme, returning the $1 million. But this sale, in turn, inflates the value of the surrounding homes, so each of those people can either sell (like for $1.2 million or something) or draw down the inflated equity–money created out of nothing by manipulating a thinly traded market. I think this did happen during the 2000s housing boom, but crypto is less regulated.

I think this is what goes in with certain crypto markets, such as XRP, which exhibits certain weird behavior. XRP is held by a handful of insiders who periodically sell. If they wanted to maximize their sale price, they could manipulate the price of XRP on the open market by trying to pump the price, and then using that inflated price sell to a private/OTC broker to book a profit.