Data from Cointelegraph Markets Pro and TradingView showed BTC price briefly exceeding $31,000 before reverting back over $800. In what appeared like a repeated manoeuvre from last week’s swift escalation, BTC/USD was able to approach resistance before momentum tapered off. This moment of gains, however, appears fleeting as the price managed to drop back to its starting point in less than 24 hours—a phenomenon recognized as a ‘leverage crunch’.
This pattern of rapid gains followed by equally swift drops raises the eyebrow of even the most seasoned traders. One such trader, Michaël van de Poppe, founder and CEO of trading firm Eight pointed out the presence of such leverage crunch in the past 24 hours. He cautioned investors against getting “chopped out” due to the volatile movements witnessed.
Such volatility also presents itself as an opportunity for investors to take advantage of the respective market, in a sort of repetition of the “Bart Simpson” chart features, where BTC’s price would mount to a plateau and retain that place, only to backtrack the full run later.
Analyst firm Glassnode in its weekly newsletter, “The Week On-Chain,” suggested that this kind of fluctuation was characteristic of Bitcoin’s price cycles. Repeatedly testifying the $30k price level, the same cyclic pathways have been witnessed around the $425 level during 2013-16 and again in 2018-19 at approximately $6.5k.
Therefore, despite the thrilling roller coaster ride that cryptocurrency investments guarantee, it is important to be conscientious with one’s capital. As alluring as the prospect of instant gains might be, the likelihood of losses are just as reality. Frequent investor advisories have warned of Bitcoin’s inherent risk, spotlighting the need not to be beguiled by the volitional swings, and to conduct due diligence before making investment decisions.
Nonetheless, the long-term “re-accumulation” tagged to Bitcoin’s volatile behaviour also defines its potential for rewarding outcomes. The key lies in understanding the cryptic patterns of Bitcoin’s repetitively tested mid-points and relying not on leverage but diligent investment strategies spanning over a diverse portfolio and a safe period.
After all, it’s important to differentiate between temporary market sentiment and the underlying value generation capability of blockchain technologies. The future of money is certainly digital, and blockchain could be the ticket to that future, but navigating this uncharted territory will require both patience and prudence.
Source: Cointelegraph
