A widely followed analyst and trader is issuing a warning on Bitcoin (BTC) after the flagship crypto asset corrected from the 19-month high reached last week.
The analyst and trader pseudonymously known as The Flow Horse says that while the anticipated authorization of a spot Bitcoin exchange-traded fund (ETF) will trigger a price spike for BTC, “most of the aggression” will come from leveraged buyers as there is less demand from spot buyers.
Consequently, the pseudonymous analyst says that “there are probably larger washouts coming”. Earlier this week, over $400 million in long positions on various crypto assets including Bitcoin were liquidated as BTC corrected sharply. Nearly 120,000 traders were impacted by the liquidation event, according to crypto data aggregator Coinglass.
The Flow Horse further warns of the risk posed by substantial changes in the price of Bitcoin following market-moving announcements over the short term.
“One thing you should consider if you are bearish BTC on any time frame.
It is probably better to be flat than express a short position.
A surprise ETF announcement can come before the end of the year, and there is no telling how the market responds to this since it is a literal first.
For a split second, we could see the offer across some exchanges just evaporate, so jump risk is very real. It would be a shame for you to get liquidated on positions you think have comfortable margin buffers on.”
Bitcoin is trading at $41,125 at time of writing, down by around 8% from the 19-month high reached on December 8th.
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