DeutschAnyone looking at the Bitcoin chart these days might think the market has only fluctuated briefly. In fact, behind the movements lies a situation that analysts describe as “potentially explosive.” The research firm K33 warns in a new report that a scenario is building in the background that should make even seasoned traders nervous. Because while the price has fallen significantly after its high flight to $126,000 in early October, massive risky long positions have accumulated in the shadow of the major exchanges. And they could tear the market down at the worst moment.
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The trigger for the concern is a finding that the K33 experts locate in the current market behavior: After the reset, investors aggressively bet on rising prices – to an extent that K33 last observed in the spring. A total of around 36,000 BTC in open longs were added weekly. A leverage load that acts like an explosive under the course.
Bitcoin: Experts See an Explosive Risk in the Market
Vetle Lunde, Head of Research at K33, describes the situation in the report with remarkable clarity. The investors had «not reacted defensively, but tried to catch a falling knife». The sharply rising funding rates showed how many traders had bet on a quick recovery. But it didn’t come. The positions now lie like a house of cards in the wind – any major downward movement could trigger liquidations like an avalanche. “There is a threat of a volatility spiral,” writes Lunde.
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The situation is made particularly explosive by another observation that K33 addresses in the report. On the Chicago Mercantile Exchange, the playing field for institutional investors, premiums for futures have fallen to their lowest level of the year, according to Lunde. A signal that shows how cautiously large market participants are acting. In the past five years, there have been seven similar situations – and in six cases a significant slump followed. The 30-day average of these declines is around 16 percent. Little to inspire confidence.
Heaviest Crypto Correction since 2017?
At the same time, the analysts classify the current phase as one of the most severe corrections since 2017. Over a period of 43 days, the decline was exceptionally strong – but in contrast to earlier cycles, experts do not expect a bear market lasting for months. The reason lies in the growing influence of institutional investors and a monetary policy situation that is likely to offer tailwind in the future.
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Despite the gloomy short-term situation, K33 remains optimistic in the long term. It is not a crash like 2018 or 2022, but a sharp but limited clean-up. Lunde mentions several brands as possible lows: $86,000, $84,000 – and even $74,000 in the most pessimistic scenario. A zone that lies exactly where the big player Strategy has its purchase price. A level at which many eyes would twitch nervously at the same time. But K33’s message is clear: Anyone who longs greedily now is playing with fire. Anyone who recognizes the risks could find an opportunity in the storm. (mck)
