Bitcoin has moved sideways in the past day after falling 20% ​​at the beginning of the week. The first cryptocurrency by market cap was showing strong belief in the upside, but according to analyst Reynaldo Marquez, the extreme greed in the market could eventually put the bulls in a tight spot. Now, the effect of leveraged transactions on the market is discussed. QCP Capital data and expert Ben Lilly’s analysis are as follows…

QCP Capital released this report for Bitcoin drop:

Singapore-based digital asset trading firm QCP Capital recently released a report. He confirmed that the sudden collapse was preceded by an increase in leverage positions in the derivatives sector. The firm had previously warned of potential downside risk as derivatives signaled “tension” among investors. Additionally, the report found that the outlook “deteriorated” as Bitcoin price broke the $52,000 barrier. Additionally, there was a feeling of “not believing” in the market that the rally that took Bitcoin (BTC) to these levels could not “fail”.

Alex Wice announces closing Bitcoin positions

Cryptocoin. com

In previous months , a similar situation occurred in May, June and July with the “Buy the rumor, sell the news” catalyst, in this case the implementation of the Bitcoin Law in El Salvador. In addition to the increase in fairness and uncertainty due to the Securities and Exchange Commission (SEC), crypto exchange Coinbase has crashed. In this sense, investor Alex Wice took to Twitter to announce that he was “exiting” his Bitcoin position. Wice believes the market outlook has changed with the recent crash…

The close rise to BTC’s yearly opening price started with a fresh surge in institutional investment. Wice highlighted the involvement of Alameda Research, the investment arm of crypto exchange FTX, as a bullish factor before the crash. However, he added:

Since this nuclear bomb, long positions are no longer comfortable. We’ve just moved on to the ball game – now we’re updating to make nukes more likely. Excessive leverage is back. Post-bounce, long positions are low-edge. We can even make a goblin town.

Will the bears regain control of BTC?

In this sense, Bitcoin is following two scenarios: more “crab-like” price action in the coming days, as in May and June, or possibly a flat drop to the $30,000 levels.

Analyst Ben Lilly has found a bearish correlation with the recent price action and a cooling in the NFT sector. As Ben Lilly noted, the EIP-1559 update has made Ethereum more responsive to changes in on-chain transactions. Similarly, Ethereum was one of the cryptocurrencies that led the market during the rally. In addition, Bitcoin fundamentals and other indicators were bearish, suggesting a pullback. Ben Lilly added:

(…) Even on the morning of the drop, we have witnessed a transaction that tends to happen when the opportunity for a “bearish” is likely to occur. That’s what I mean when I see some weird transactions happening on the on-chain.

The turning point is approaching according to Ben Lilly

Bitcoin (BTC) may be at a crossroads, according to the analyst. In the coming days, the fate of the bull run could be determined if the price of BTC continues to trend downwards to form a “Bull/Bear Split” as seen below.

In this context, long-term BTC holders will gain importance. Activity as measured by the Age of Output Spent Bandollaryellow (in pink below) may indicate a “liquidity outflow”.

With this in mind, the analyst said that a possible short squeeze and its continuation could come in case of eclipse. Ben Lilly’s final analysis was:

With a rapid change in sentiment, the market will sometimes hunt for extreme bearish behavior. So shorts who enter late can get bored quickly. We’ll see what the build looks like when this easy selection scenario happens. If it’s a big hit, maybe we can venture another $53,000.

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Michael Lewis


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