The market is back in the green after a dramatic drop. But it is too early to predict how long the optimism will last.
Several versions of the bitcoin and the market crash were expressed, two of them are a ban on Chinese financial institutions to work with cryptocurrency and market manipulation by Elon Musk.
Founder of investment firm SkyBridge Anthony Scaramucci said that the main reason for the collapse was the liquidation of positions of small investors with large leverage. But Scaramucci did not explain why small investors got into this situation. It follows from his statement that retail has shown excessive optimism, which was not confirmed by fundamental factors. However, it is highly likely that retail investors are simply more prone to panic.
The losses of traders are estimated at $8 billion, but this is not a record. Such cases have already happened in the history of the market, even this year. According to Scaramucci, a dramatic fall in the market does not mean a change in trend, the bull market will continue.
Bitcoin added more than 25% in a day, and there is a high probability that the recovery will continue. This forecast is supported by the massive withdrawal of the leading cryptocurrency from exchanges. BTC worth $7 billion has already been withdrawn, according to blockchain data provider Glassnode. This is the largest outflow of bitcoin since March 2020.
Obviously, such dynamics can only be provided by institutional investors who made bulk buying at the lows. Within a few days, there was a redistribution of leading crypto assets, they moved from retail investors to institutionals.
Amidst this news, not only bitcoin is up, but most of the leading altcoins are growing by 6-10%. Dogecoin (DOGE) is also rising, and Elon Musk helped in this again. Tesla recently announced the launch of the fastest production car Model S Plaid on June 3.
Model S Plaid accelerates from 0 to 100 km/h in 2 seconds. Musk tweeted the word Tesla and two emojis with the meaning of “hodl”, and a little later – an image of a one-dollar banknote with a picture of DOGE instead of George Washington. This was enough for DOGE to skyrocket by 16%.
Elon Musk’s violent games on the crypto market make angry some people from the crypto community. Here is just one of the comments on Musk’s tweets:
– I lost everything because of your crypto tweets and today I live under a bridge like the lutin grognon (French cartoon vagrant). I hope you are proud.
In fact, the losses of retail investors come from their excessive impressionability. Perhaps it is too difficult for such people to deal with cryptocurrencies. Perhaps Elon Musk is encouraging such retail investors to leave the market. Institutionals have already learned to use Musk’s manipulations to their advantage. And the massive influx of institutionals helps to stabilize the market as a rule.