Feeling of hopelessness pushes traders to extremely risky endeavors on market
Bitcoin’s fall below $16,000 was something most cryptocurrency markets weren’t expecting just a week ago. However, the reaction from traders and investors was not as bad as one might imagine. according to on-chain and market dataMarket participants are actively craving the first cryptocurrency, without looking at what happened yesterday.
Almost immediately after the plunge below $16,000, the market saw a surge in open interest on derivatives trading platforms, reflected in an exponentially growing number of long orders.
The most interesting part of this trend is the behavior of investors whose funds are locked on the FTX exchange. Most traders who are unable to withdraw funds from the notorious exchange are developing extremely high risk tolerances, betting almost 100% of their portfolios on the growth of the first cryptocurrency, despite the most recent price action.
Unfortunately, the reasoning behind their decision is purely psychological since the majority of users believe their funds will be impossible to withdraw, and the feeling of hopelessness is fuel for making unusual financial decisions.
However, it is too early to call this a day for the crypto market crash due to the FTX and FTT situation. The insolvency of one of the world’s largest cryptocurrency exchanges poses a huge risk to many entities on the market, including funds such as Galaxy Digital, Sequoia Capital and The DAO such as TruFi.
In a few hours, millions worth of SOL cryptocurrency will be released from staking, potentially causing a catastrophe on the market that will fuel another nosedive for Bitcoin and the market as a whole.
