Popular cryptocurrency analyst has issued a warning about Bitcoin (BTC) after the flagship of the markets corrected from its highest level in 19 months last week.
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The analyst, known by the pseudonym The Flow Horse, stated that the expected authorization of a spot Bitcoin exchange-traded fund (ETF) would trigger a price increase for BTC, but it would likely come from leveraged buyers because “most of the eager ones” have fewer tokens. He also claimed that there is demand from spot buyers. In his remarks about the subject, The Flow Horse indicated that “probably bigger fiascos are to come.”
Data from Coinglass
Earlier this week, long positions worth over $400 million in various cryptocurrencies, including Bitcoin, were liquidated following a sharp correction in BTC’s price. According to the crypto data aggregator Coinglass, about 120,000 investors were affected by the liquidation event. The Flow Horse also warned about the risks created by the significant changes in Bitcoin’s price following announcements that moved the market in the short term. The expert included the following statements in his remarks:
If you show a downtrend in BTC at any time frame, there’s something you need to consider. It’s probably better to be flat than to express a short position. A surprise ETF announcement could come before the end of the year, and since this is a first, it’s unknown how the market will react to it. We saw offers on some exchanges evaporate for a moment, so the risk of jumping in is quite real. Being liquidated in positions where you thought you had comfortable margin buffers would be embarrassing for you.
In conclusion, the cryptocurrency analyst highlights the potential risks related to the expectations of a spot Bitcoin ETF and the demand for leveraged buying following the price correction of Bitcoin, cautioning investors against market fluctuations. Bitcoin was trading at around $41,125, which is an approximately 8% drop from its highest level in 19 months reached on December 8, at the time of writing this article.
