Helena Lyng Blak
9 weeks ago

Crypto-expert: Correction, not beginning of downward trend

Cryptocurrency reached a tipping point, but this cryptocurrency expert does not believe it to be the beginning of a downward trend.
Cryptocurrency on Binance trading app
Chinnapong / Shutterstock.com

Recently, there have been worries about the high use of borrowed money, or leverage, in the cryptocurrency market.

"Just last week, traders were facing annual rates of up to 150% to maintain long positions in Bitcoin on the perpetual market," says cryptocurrency analyst Mads Eberhardt.

He explains that this situation proved to be unsustainable by the week's end, leading to a market correction and extensive liquidations in the futures market.

"However," he says, "it is premature to declare the end of the crypto bull market. This situation largely mirrors past corrections within bull markets, triggered by over-optimism and excessive leverage."

He argues that there is not much evidence to suggest a complete market change is happening. The future still looks bright due to several positive factors, like the Bitcoin halving event, strong investment inflows, more money moving in the market, and the possibility of an Ethereum-based investment fund.

"It seems that many Bitcoin holders have capitalized on this correction to secure profits, which was a matter of time given the impressive rally since last autumn," Eberhardt continues.

He expects that Bitcoin and Ethereum will not change much in price for a while as the market stabilizes, rather than a further 20% drop, before continuing up again.

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