Bitcoin Traders Warned of Price Fluctuations Amid Leverage Surge and Market Volatility
Summary:
Market experts warn that highly leveraged Bitcoin traders might be in for a surprising turn due to the digital currency's approaching crucial point, likely to cause drastic price fluctuations. Over the past 24 hours, Bitcoin leveraged positions amounting to $39 million were liquidated. Cryptocurrency trader HoneyBadger suggests attention to the current Bitcoin price chart showing a symmetrical triangle. Mechanism Capital's co-founder, Andrew Kang, expects an upward trajectory for Bitcoin. Conversely, HoneyBadger and other traders have decided to abstain from trading due to potential significant price dips and high market volatility.
Bitcoin (BTC) traders who have highly leveraged positions might be taken by surprise as the digital currency approaches a decisive point, which could lead to drastic price fluctuations, caution market experts. "The market previously functioned on cruise control, however, at this point, trader sentiment appears to be excessively leveraged, providing a playground for market makers who capitalize on heightened emotions and reckless tactics," says anonymous online cryptocurrency trader HoneyBadger in an X posting dated April 11. "Currently, market creators are prospering more than ever due to their ability to manipulate investors," he added. CoinGlass data highlights that Bitcoin leveraged positions amounting to $39 million were liquidated in the previous 24 hours, with the overall figure split into $18.38 million in long positions and $20.62 million in short ones.
HoneyBadger encourages attention to the Bitcoin price chart, which is seemingly shaping into a symmetrical triangle, a balanced pattern different from bullish ascending or bearish descending triangles which traders typically reference to forecast future trends.
He suggests that traders could misjudge this as a "triangle retest," encouraging them to confidently place long positions. However, he cautions that these traders could be blindsided by a sudden fakeout, a possibility for prices to briefly deviate from the chart pattern before quickly reversing. Andrew Kang, the co-founder of Mechanism Capital, however, adopts a more positive outlook, expecting a continued upward trajectory to set entirely new highs subsequent to the halving of Bitcoin on April 20. "I foresee BTC to reach $80k by May," Kang posted on X on April 11. Bitcoin is presently priced at $70,500, having thrice hit support at $68,500 in the past week, according to CoinMarketCap.
The price of bitcoin has fluctuated between $66,100 and $72,520 in just the past week. Following the release of recent U.S. inflation data that fell below expectations, Bitcoin’s price briefly dipped 3% below its support level on April 10. April 2 saw a 5% dip in Bitcoin's price from $69,450 to $65,970, resulting in the liquidation of $50 million long positions of Bitcoin. Leveraged positions have seen a surge in recent days, foreshadowing a substantially greater impact on long positions if a similar 5% drop occurs.
If Bitcoin’s price sees a 5% surge to $73,819, short positions worth around $2.14 billion will likely be liquidated, as per CoinGlass. Meanwhile, Bitcoin critic Peter Schiff, an advocate for gold, claims that too many traders are overconfident that long positions in Bitcoin are unbeatable. "Markets rarely pan out as speculators envision. In most cases, they end up let down," he stated in the April 11 post on X.
On the other hand, if Bitcoin’s price declines by 5% to $66,671, long positions worth approximately $1.63 billion will likely face liquidation. Amid such market volatility, HoneyBadger prefers to stay out of active trading, unconcerned about temporary price dips as he prioritizes protecting his principal investment.
Expressing similar views, Arthur Hayes confirms he will suspend trading until May, as a potential crypto "firesale" looms. Echoing this sentiment, HoneyBadger writes that his tactic involves calculated patience, and should he be misguided, he states, "At the very least, my capital is safeguarded, and I can always bounce back later."
Another crypto trader, Jelle, counsels his 78,500 X followers to restrain themselves and avoid getting "swept away" by falling "victim to leverage."
This article does not offer investment advice or suggestions. Each investment and trading decision comes with an associated risk, and readers should carry out their own research before making a commitment.
Published At
4/12/2024 7:03:00 AM
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