In the cryptocurrency space, there are several areas that deserve our attention in the future. In the short term, the first key question is whether the cryptocurrency market has reached a bottom. A sharp correction in the market can easily form a self-circulating downward cycle, and it is necessary to exhaust the momentum before it can bottom out. The price drop will force leveraged traders to sell due to margin calls. More than $1 billion of futures have been liquidated. It is still unclear whether the bottom has been reached. It is necessary to pay attention to whether the forced liquidation slows down.
At the same time, the health of companies in the crypto ecosystem is also worth paying attention to. For example, in the 2021 crisis, violent fluctuations can bring down companies with highly leveraged balance sheets. There are rumors that at least one market maker (Jump Trading) is facing challenges, and if there is contagion, the downward trend may be prolonged. In addition, the liquidity of ETFs cannot be ignored. It depends on whether ETF investors sell or buy more during the correction. These three factors will greatly affect the short-term trend.
However, the real advice is not to be swayed by short-term factors, but to look at the long term. Bitcoin is inherently highly volatile, and this characteristic will continue. The current volatility once again shows that short-term trading opportunities are difficult to grasp, and it is a mistake to bring a trading desk mentality into the crypto space. What we are investing in is a major change in the way global currencies operate. We should resist the urge to focus on intraday prices and think more about the development of Bitcoin in the next few years. Historically, cryptocurrencies will fall in the early stages of global economic panic, but often rise in the following year. Although we dare not assert that this time will be the same, we can think and grasp it in reverse.
