Why This Investor Fled His Bitcoin Position, Should You Do The Same?

Bitcoin has been moving sideways in the past day after a 20% dropped at the start of the week. The very first cryptocurrency by market was revealing strong conviction to the benefit, however eventually the extreme greed in the market might have bet the bulls.

At the time of writing, Bitcoin trades at $46,875 with a 1.2% profit in the daily chart.

A current report by QCP Capital verified that the flash crash was preceded by a boost in take advantage of positions on the derivatives sector. The firm previously warned about the potential downside risk as derivatives were signaling “nervousness” amongst investors.

When the rate of Bitcoin broke the $52,000 barrier, the outlook “worsened”, the company stated. In addition, there was a sentiment of “disbelief” in the market that the rally that took Bitcoin into those levels was unable to “fail”.

In previous months, May, June, and July, a comparable scenario accompanied a “Buy the rumor, sell the news” catalyzer, in this case the application of the Bitcoin Law in El Salvador. In addition to an increase in fair and uncertainty due to the Securities and Exchange Commission (SEC) cracked down on crypto exchange Coinbase.

In that pick up, investor Alex Wice required to Twitter to revealed that he has “exited” his Bitcoin position. Wice believe the outlook in the market has changed with the recent crash.

The rally from near BTC’s rate annual open began driven by a fresh rise in institutional financial investment. Wice highlighted the participation of Alameda Research, the investment arm of crypto exchange FTX, as bullish factor previous to the crash. However, he added:

Since this nuke, longs are no longer comfortable. We’ve altered from up just to ballgame – we upgrade for nukes to be a lot more likely now. Overleveraging is back. Post bounce, longs are low edge. We could even goblin town

Bitcoin Data Speaks, Will The Bears Take Back Control?

In that pick up, Bitcoin follow 2 circumstances, more “crab like” rate action in the coming days, as it did throughout May, and June, or a straight dropped more than likely back into the $30,000 levels.

Analyst Ben Lilly has found a correlation with the recent price action to the downside and a cool off in the non-fungible tokens (NFT) sector. As Ben Lilly mentioned, the EIP-1559 upgrade as made Ethereum more vulnerable to variations in on-chain activity.

Similarly, Ethereum was one of the cryptocurrencies leading the market during the rally. In addition, Bitcoin principles and other signs turned bearish recommending a pullback, Ben Lilly included:

(…) even the morning of the drop we witnessed a transaction that tends to take place when a “by the dip” opportunity is likely to happen. This is what I suggest when I saw a couple of odd deals happened onchain that led us to think a few of this was premeditated.

Bitcoin could be at a turning point, according to the analyst. In the coming days, the fate of the bull-run might be chosen if BTC’s rate continues to trend to the drawback to form a “Bull/Bear Divide”, as seen listed below.

In that context, long term BTC holders will become importance. Their activity, as determined by the Spent Output Age Bands (In pink listed below), might show a “liquidity exit”.

With that in mind, the analyst doesn’t rule out a potential short squeeze and more continuation if that holds, Ben Lilly added:

With a fast modification in belief the marketplace will often take advantage of extremely bearish habits. Meaning price can quickly squeeze out shorts who entered late. Once this easy marks situation plays out we’ll see how the structure looks.  If it’s a big squeeze then maybe we can get another attempt at $53k.

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