Grayscale CEO: Traders exiting big leverage positions on BTC caused its slump

Grayscale CEO: Traders exiting big leverage positions on BTC caused its slump

 

Grayscale CEO Michael Sonnenshein believes every player in the crypto ecosystem is well aware of its inherent volatility. He said this during an interview earlier today, adding that waking up to a 20% plunge in the Bitcoin (BTC/USD) market is not unusual. Highlighting just how the ecosystem is, Sonnenshein noted that BTC’s recent plummet is the fifth or sixth drawdown of its magnitude this year.

In the interview, Sonnenshein said BTC likely plunged because there was a lot of leverage in the system. He noted that this level of leverage saw the market record liquidations worth over $1.00 billion (£0.75 billion) over the weekend. According to him, the crypto ecosystem still has some places where people can get oversized leverage on BTC trades.

Sonnenshein added that high leverage introduces high volatility in the market, which often results in dramatic price movements. He acknowledged that the market faces a series of bubbles and bursts. However, he believes investors know volatility comes with BTC’s territory. As such, most of them know that crypto is only an ideal investment for those that can stomach its volatility.

More people are entering BTC’s market

However, he believes BTC’s current performance is less about price movements and more about a change in the attitudes of investors. He noted that Grayscale released its third annual investor study around BTC and examined how adopters feel about the coin.

Sonnenshein claimed that the study shows over half of the surveyed investors are thinking about BTC as a long-term investment. He added that the study’s findings showed a massive uptake in the number of female investors in the crypto space. Additionally, Grayscale found that mature investors have been increasingly injecting funds into digital assets.

With BTC plunging below $50,000.00 (£37,722.50), Sonnenshein noted that most Grayscale investors are taking the opportunity to average down on their positions. Specifically, he said institutional investors take advantage of pullbacks to dollar-cost average on their positions because they are long-term investors. In so doing, he believes they get a chance to bolster their investments over time.

This news comes after BTC plunged from a daily high of $57,482.17 (£43,378.92) on Friday, December 3, and traded as low as $49,200.70 (£37,129.31) on Saturday. The coin continued bleeding on Sunday to hit an intraday low of $47,857.50 (£36,106.09) before recovering some of its losses to close the day at $49,368.85 (£37,251.51).

At the time of writing, BTC is changing hands at $50,169.62 (£37,825.38) after gaining 2.15% over the past 24 hours.

The post Grayscale CEO: Traders exiting big leverage positions on BTC caused its slump appeared first on Invezz.



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