With the bear market reaching its tightest squeeze yet, Bitcoin [BTC] has seen a drop to its lowest level this year. The downward pressure seems to have the upper hand as the coin has slid 10% in the last 24 hours to trade at a price close to $3400.
Reflecting the power of the bear over the market, the number of open short trades for Bitcoin has reached an all time high. With over $3.1 billion in trading volume over the past 24 hours and dominating 31.8% of Bitcoin’s total trading volume, derivatives trading platform BitMex has taken the market away from the bears and given profits to the short traders.
With close to 40,000 being opened on the platform in order to execute short positions, the number of contracts continues to increase as the price of Bitcoin falls. They are positions created by traders trying to hedge their risk with the decline of the top cryptocurrency, as the long positions are currently being exposed to negative price movement.
The coin has been in a downward spiral since it broke the $6000 level in November, as it has now reached a yearly low of $3400. This creates a lucrative opportunity for short investors, as it allows them to leverage on the downwards movement of the coin.
This is done through a relationship between the investor and a lender, wherein the investor borrows a certain amount of the assets and sells them immediately. This is done hoping that a buy can later be executed when the price continues to move downwards, and return them to the lender for a profit.
With the number of short contracts continuing to rise, it presents a difficult situation for Bitcoin as it has multiple individuals looking out for the price of the coin to reduce. Moreover, as the market is full of whales who are ready to dump the coin at a moment’s notice, the potential for market manipulation in this fever pitch of the bear increases.
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Bitcoin will likely be valued at $100,000 with a market cap of over $2 trillion before the end of 2021
The entire cryptocurrency market seems to be on the brighter side of the market since the beginning of the year. A majority of the coins have recorded significant recoveries from their 2018 slump, a period during which most coins lost over 90 percent of their value, when compared to their all-time highs. Among all the coins in the market, Bitcoin [BTC] aka the digital gold, was noted to be making a massive comeback as the coin breached the $11,000 mark after nearly 15 months. The coin however, soon retracted to settle below the $11,000 level.
According to CoinMarketCap, at press time, Bitcoin was trading at $10,887.27 with a market cap of $93.549 billion. The coin recorded a 24-hour trading volume of $20.757 billion for the past 24 hours and saw a massive rise of over 17 percent over the past seven days.
Anthony Pompliano, Co-founder of Morgan Creek Digital Assets, predicted that the largest digital currency could rise to reach $100,000, before the end of 2021. Pomp added that he was around 70-75 percent confident in this prediction. He stated,
“As I have previously said, making predictions is difficult […] Part of my process as a professional money manager is forming a thesis (price target), identifying a timeline (date), and establishing a confidence level. And then constantly re-evaluating those three aspects of my thought process as I receive new information.”
Pomp however, listed six pointers that have to be understood beforehand. First, this prediction is not an investment advice, and people should do their own research before investing in the digital currency. The second is with respect to Bitcoin’s volatility, with Pomp remarking that since it was a highly volatile market, the coin could witness a significant fall before being valued at $100,000. He stated,
“I anticipate that there will be numerous 20-30% drawdowns from new all-time highs as the asset continues to appreciate in value. These mini-boom/bust cycles should not cause panic, but rather need to be understood as natural market dynamics whenever an asset gains significant value in short periods of time.”
Further, the partner of the investment firm stated that the rise would be driven by several catalysts. This includes institutional adoption, exchange-traded funds and retail product approvals, global instability, governments all across the globe manipulating currencies, markets and economy. He went on to state,
“The market cap of Bitcoin will reach $2+ trillion when Bitcoin is worth $100,000. This is less than 1/3 the market cap of gold and less than 1/40 the global money supply.”
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