The cryptocurrency market remains gloomy due to the aggressive attitude of the Federal Reserve. Bitcoin remains stuck in a range of $18-19,000. According to Jason Goepfert, a major cryptocurrency influencer, traders expect a complete collapse of cryptocurrencies.
According to Jason Goepfert, investors spent nearly $20 billion last week buying put option protection. He reveals that it is a record. He reveals that leveraged traders await that a crypto crash is imminent.
Why is a cryptocurrency crash almost certain?
The Federal Reserve has taken an extremely aggressive stance to curb runaway inflation in the economy. It is also engaging in quantitative tightening to ease its balance sheets that have soared during the pandemic. the fed raised interest rates by 75 basis points three times in a row. Even the most optimistic members of the market expect a 100 basis point rally before the end of the year.
Meanwhile, recession warnings are sounding throughout the market. The World Bank estimates that the global economy will suffer a recession next year. FedEx issued a dire warning that the slowdown in demand has accelerated. If Fed Chairman Jerome Powell follows in the footsteps of his predecessor, Paul Volcker, the economy will effectively enter a recession.
How do cryptocurrency traders protect themselves?
Traders spent a record amount buying put options. A put option gives investors the right, but not the obligation, to sell a certain asset. A negative sentiment is considered for the value of the underlying asset. Traders also invested a record $46 billion in short index futures.
However, not everyone shares his sentiment. Michael van de Poppe, a prominent cryptanalyst and CEO of Eight Global, thinks a little squeeze is coming. A short-squeeze is a scenario where a shorted stock rises and forces short sellers to sell their position at a loss. Poppe believes that a crypto rally is imminent.
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