Hedge fund manager advised crypto investors to be wary of a recent drop! So why? Here are the situations that investors should pay attention to..
The hedge fund manager has explained the upcoming challenges of the cryptocurrency market!
Hal Press noted that a large number of short positions have accumulated during a period of low liquidity. According to the data provided by Hal Press, there may be a short position squeeze in the near future. A short squeeze occurs when the price of a cryptocurrency suddenly rises, forcing traders betting against that cryptocurrency to buy the cryptocurrency quickly to close their positions and minimize their losses. This sudden buying move can push the price higher, creating a cycle that “squeezes” short sellers.
Short selling can lead to rapid price increases, which can be driven by market sentiment, news, or other factors that trigger a market reversal.
Data from CoinGlass reveals that the number of short positions on the top cryptocurrency exchanges is higher than the number of long positions. About 50.69 percent of all investors predict that the price of Bitcoin will fall. Despite the high probability of a short squeeze, Press argues that long-term concerns about the crypto market remain.
Experts explained: Crypto investors should pay attention to these 3 reasons!
Press noted that Ethereum is the fund’s largest position and its cautious stance is not primarily due to the Shanghai or Shapella upgrade scheduled for April 12. cryptocoin.com As we reported, the Hard fork will circulate more than 16 million ETH, which is 14 percent of the current supply. Instead, Press is concerned about the broader global landscape, with many countries adopting stricter regulations on crypto, making the technology more difficult to adopt mainstream.
Leaders of the UK, Japan, Canada, Germany, France, the United States and the European Union support stricter regulations for customer protection and greater transparency for crypto businesses. These G7 countries plan to establish global regulatory standards for crypto.
According to Press, the resilience of major cryptocurrencies can be attributed to inelastic demand. For example, Binance CEO Changpeng Zhao has converted nearly $1 billion worth of BUSD from the Industry Recovery Wallet into “native crypto” such as BTC, BNB, and ETH. This move was driven by Paxos’ decision to cease printing BUSD, causing its market value to gradually decline.
Now that this conversion has subsided, there are very few new cryptocurrencies entering the space. Press believes these dynamics pose a challenge for the market to maintain its current levels over the long term. The North Rock Digital founder also warned that potential regulatory actions could force investors to reconsider their positions. He stressed that the price is driving the situation. Therefore, this will likely change as soon as significant regulatory action takes place without a strong buyer to support the market.
The fund manager also acknowledges that he may be wrong and that the market may continue to rise. However, he thinks the risks outlined above should be considered for a more measured approach to the cryptocurrency market.
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