Last week the price of Bitcoin reached an all time high above $64,000, then quickly dropped to the upper $40,000’s. This coincided with a drop in the stock market, and both were blamed on Joe Biden’s proposals concerning capital gains tax. However, the following YouTube video by Ellio Trades Crypto explains that this cool off matches a pattern seen in past bull runs. It also explains how big account holders, called “whales,” perform tricky trades to manipulate the price of cryptocurrencies.

The first thing to understand is the stock to flow ratio. This is a model that assumes value is determined by scarcity, and is defined by the ratio of current amount of a commodity available to the flow of new production. Based on this, the group PlanB calculates a Bitcoin price target above $200,000. When PlanB looks at previous bull runs in 2013 and 2017, they match up proportionately with what we see today. They even spot big dips midway through the runs, just like what we experienced last week.

During the first phase of a bull run, crypto newcomers invest in Bitcoin, but also try out several altcoins. The experienced whales who bought the altcoins early cash out, and move their gains into Tether or other “stable coins.” A stable coin is a cryptocurrency that matches its value to a fiat currency, like the US Dollar. The video notes that giant purchases of Tether are happening as the rest of the crypto market drops.

Only a few altcoins are reliable with good fundamentals, but that’s hard for newbies to know, so they buy into whatever looks exciting. Usually, the best investment strategy is to buy into an asset a little at a time, and watch it grow. When you hold cryptocurrency for a few months, you get used to the volatility, and you’re almost certain to profit given enough time.