Strong thunderstorms broke out all last night that rattled windows and sent the cats running for cover. There were also overnight storms in the cryptomarkets with Bitcoin in particular taking the brunt falling from over $60,000 to $58,000 in mere minutes.
There has been an unending stream of recent debates and analysis from both the bears and bears as to what the valuation of Bitcoin will be at year’s end. The release of ProShares Bitcoin ETF along with more widespread adoption of cryptocurrencies in general led to a wild run up for Bitcoin, setting all-time highs. While a continued up swing is expected in regards to long term valuations, some like CEO Ki-Young Ju of CryptoQuant expected some volatility in the short term;
“$BTC estimated leverage ratio is about to hit a year-high. It seems obvious that the market is over-leveraged now. We’ll see some volatility shortly”.
Jonathan Chessmaster from crypto-derivatives exchange FTX and Petr Kozyakov, co-founder and CEO of Mercuryo, a leader in the global payments network field, both added to the chorus of pundits calling the pullback something natural and expected. “The market has been leveraged long for a few weeks, so there has been that overhang in positioning,” said Chessterman with Kozyakov adding;
“The price slump is being fueled by sellers, who appear to be acting simultaneously in taking profits on their investment. The price correction is an organic one and was not triggered by a clear-cut fundamental.”
The reason for the recent pullback seems to be some profit harvesting as over $700 million leveraged long positions were liquidated on various exchanges. The sell off pushed Bitcoin below the $59,000 level making a further pullback possible, but at the time of publication, Bitcoin has been bouncing between the upper $58,000 level to just above $59,000.
While short term volatility is to be expected, especially after such recent explosions in valuation, long term holders remain to be incredibly bullish on Bitcoin. Even after the recent sell-off, Bitcoin is still up over 30% this month alone.
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