US markets continue to get weaker and more fragile. Liquidity continues to concentrate off exchange. This issue gets ignored during big bull runs but will become acute as soon as the selling starts. Feedback loops will be disastrous. pic.twitter.com/KAChQTtEE3
— Dave Lauer (@dlauer) November 29, 2021
Off exchange liquidity trading means private entities complete a private transaction off market. The transaction doesn’t get reported to lit markets, until the transaction is complete. This is bad for both bears and bulls, as these large transactions don’t impact price discovery until after the transaction is done. AKA the institution gets the best price and the retailer is left with sloppy seconds.
Even though this hurts bulls, too. Bulls just don’t care, because stonks only go up.
When the market is in free fall. Off exchange transactions will be where the “rug pull” is at. Institutions will start dumping, and it won’t impact price discovery until AFTER they dumped. This means retail will begin panic selling, after the damage has already been done.
Then when markets bottom out. Guess who will be there, utilizing off exchange transactions to GOBBLE UP value shares, without impacting the prices of stocks until AFTER they buy. Leaving retail once again to FOMO over sloppy seconds, as prices continue to rise after the great reset.