Traders utilizing leveraged positions in Bitcoin may face unexpected outcomes as the cryptocurrency approaches a pivotal moment that might lead to significant price fluctuations, according to analysts.
Crypto trader Honeybadger, writing pseudonymously, expressed concerns about the market’s current state.
“The market was in easy mode, but right now clearly there’s too much leverage and market makers are having a field day exploiting high emotions and degenerate behavior,” he stated in an April 11 post on X.
He also remarked on the activity of market makers: “Market makers are having the best time ever chopping everyone up.”
Recent data from CoinGlass highlighted that $39 million in leveraged Bitcoin positions were liquidated in just 24 hours, encompassing $18.38 million in long positions and $20.62 million in short positions.
Honeybadger noted the formation of a symmetrical triangle on the Bitcoin price chart, a neutral indicator that might mislead traders into overly confident long positions.
He cautioned about the potential for a fakeout, which could surprise traders expecting a stable pattern.
Andrew Kang, co-founder of Mechanism Capital, contrasted with a more optimistic view.
He anticipates Bitcoin will reach new highs post the April 20 Bitcoin halving.
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“I expect BTC to touch $80K by May,” Kang predicted on X. Currently, Bitcoin trades at $70,500, after testing a support level of $68,500 multiple times within the week, according to CoinMarketCap.
The market also responded negatively to recent U.S. inflation data, leading to a 3% price drop below the support level on April 10.
Additionally, a sudden 5% decrease in Bitcoin’s price on April 2 resulted in $50 million in long position liquidations.
Another similar drop now would severely impact long positions, with predictions of $2.14 billion in short positions being liquidated if Bitcoin increases by 5% to $73,819.
Peter Schiff, a gold advocate and Bitcoin skeptic, warned of overconfidence among Bitcoin long position holders.
“Markets seldom work out the way speculators expect them to. More often than not they end up disappointed,” Schiff observed in his X post.
Given the current market volatility, Honeybadger has chosen to remain uninvolved, prioritizing capital protection over potential gains.
Arthur Hayes shared this cautious approach, opting out of trading until May due to potential market downturns.
Similarly, Jelle, another crypto trader, advised his followers on X to avoid unnecessary risks with leveraged trading.
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