It is easy to see that Bitcoin has not done well in the past two days – ever since it hit $9,200, the major cryptocurrency plunged as low as $7,600 which is more than 17% lower than the weekend high. This move liquidated over $200 million worth of BitMEX long positions in the process and one top crypto analyst explains what was the real reason behind it.
As we can see in the Bitcoin news now, the cryptocurrency is struggling to gain traction in the $7,900 mark and is desperately heading in the $8,000 zone. The move from two days ago definitely caught many traders off guard, hence the massive amount of liquidations. However, there are some weighing in on what crashed Bitcoin.
Raoul Pal is the top crypto analyst and CEO of the finance media startup Real Vision, and a former hedge fund sales lead at Goldman Sachs. He is also a long-time Bitcoin adopter (since 2013) who claims that the real BTC weakness may be related to hedge funds. As he said in a tweet published on Monday:
“It feels like any hedge fund that was long bitcoin is having to liquidate. VAR takes no prisoners. (For those new to VAR it is the measure of risk in a portfolio and is connected to volatility, so as vol goes up of all assets, they have to reduce risk).”
It feels like any hedge fund that was long bitcoin is having to liquidate. VAR takes no prisoners. (For those new to VAR it is the measure of risk in a portfolio and is connected to volatility, so as vol goes up of all assets, they have to reduce risk). $BTC #Bitcoin
— Raoul Pal (@RaoulGMI) March 9, 2020
Indeed, the volatility of Bitcoin (as data from Skew Markets shows) has spiked over the past few days as the market trended lower, likely shifting the allocations. And while Pal is the top crypto analyst who sees the weakness due to the hedge fund narrative, he also remarked that Bitcoin’s drop is a “buying opportunity” and added that the current situation in the fiat markets is “accelerating the need for a new financial system over time.”
On top of this, there is the COVID-19 outbreak which turned the stock market into a bloodbath and was also felt in the crypto assets world. There were some serious blows over the past few weeks and although some said that the collapse of the BTC price is not correlated with the Coronavirus, analysts have observed an absence of volume in the mainstream crypto markets ever since the outbreak started.
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