The cryptocurrency market remains stagnant due to the hawkish stance of the US FED. Bitcoin is stuck in the $18,000 to $19,000 range. According to Jason Goepfert, a major crypto influencer, individual traders expect a complete crypto crash. Here are the details…
Cryptocurrency market collapse expectation
According to Goepfert, retail investors spent nearly $20 billion buying put option protections last week. He says this is at a record level. Jason reveals that leveraged traders are anticipating a crypto crash. cryptocoin.com As we have also reported, the US Federal Reserve (FED) took an extremely aggressive stance to rein in the rising inflation in the economy.
They are also engaging in quantitative tightening to unload their balance sheets, which have ballooned during the pandemic. The Fed increased interest rates by 75 basis points three times in a row. Even bullish members of the market expect an increase of 100 basis points before the end of the year. Meanwhile, recession warnings are echoing throughout the market. The World Bank believes the global economy will be hit by a recession next year. FedEx has issued a serious warning that the slowdown in demand is accelerating. If Fed chairman Jerome Powell follows in the footsteps of his predecessor, Paul Volcker, the economy will indeed enter recession.
How are crypto investors protected from the current situation?
Retail traders have spent record amounts of money on put options. A put option gives investors the right, but not the obligation, to sell a particular asset. It is considered a negative sentiment for the value of the underlying asset. Traders also invested a record $46 billion in net shortfall in indexed futures. However, not everyone shares their feelings. Michael van de Poppe, a major crypto analyst and CEO of Eight Global, believes a short squeeze will happen. A short squeeze is a scenario where a stock that is believed to be falling is rising and forcing short sellers to sell their positions at a loss.
Meanwhile, the cryptocurrency market ends the week neutral. Still, while Bitcoin is pretty sluggish right now, that wasn’t the case earlier this week. The asset had jumped from $18,300 to $20,000 the day before the Fed’s last rate hike. But by the time the 75 basis point gain became official, it once again dropped by almost $2,000.
This resulted in a drop to $18,100, a three-month low for BTC. As fear settled in the markets once again, Bitcoin bulls accelerated and pushed the asset above $19,000. The next few days saw minor volatility, with the most notable increase pushing the cryptocurrency just above $19,500. This was short-lived, however, with BTC returning to around $19,000 where it is currently stuck.
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