Bitcoin, the world’s most popular cryptocurrency, is tanking. After hitting a an all-time high of over $64,000 earlier this year, Bitcoin is now trading around $38,000 in heavy volume.
Just this past week, a top fund manager at Bank of America called going long Bitcoin the most crowded trade.
Earlier today, it was reported that CoinShares, a digital asset manager that for the week ending 17 May 2021, Bitcoin saw the largest outflows on record totaling $98 million last week.
And it is not just Bitcoin, other popular cryptocurrencies are sinking too. Ethereum is down over 20% today and popular meme-coin Dogecoin is off by around 25%. There are more.
So what is going on? Hard to tell, but China has just announced it has banned financial institutions from accepting crypto payments – perhaps to buttress the Digital Yuan it is launching. (but people can still hold cryptocurrencies)
But volatility in the crypto markets is nothing new and for traders, rapid changes in price can create an opportunity to make some money.
Antonio Brasse, co-founder and CEO of BlockQuake – a new crypto exchange, tweeted that he generated a 40% gain in a leveraged short position in just 24 hours.
I just closed a leveraged short position on #BTC #bitcoin $BTC for a 40%+ gain in less than 24 hrs 🙌 while I believe it’s going to 100k at some point, it is clearly in a temporary downtrend. #USD $USD #cryptocurrency #cryptocurrencies #blockchain
— Antonio Brasse, CPA, CIA, CFSA, CISA, CAMS (@antoniobrasse) May 18, 2021
Yesterday, Goldman Sachs veteran Raoul Pal predicted that Bitcoin will inevitably go to $250,000 within the next 12 months, no less.
Can it happen? Yes. Will it? Who knows. But if you are a trader, you love the volatility. As the saying goes, buy what is cheap and sell what is expensive.