Wise in Using Leverage During Market Anomalies?
Assessing the sharp decline in bitcoin prices over the past month triggered by investors reducing leverage—or cutting back on debt and margin—and increased risk-off sentiment (avoiding risk).
This condition aligns with the dynamics occurring across most asset classes.
Throughout November, bitcoin has dropped 21.2%, with losses over three months reaching 23.2%. The chance of closing the year below US$90,000 is growing. In fact, at the beginning of October, bitcoin briefly surpassed its all-time high of over US$126,000.
Like other asset classes, there are always different cycles and volatility. What you are seeing is not only happening with crypto prices.
Currently, there is a slight reduction in risk and deleveraging occurring as well.
The global market is also experiencing pressure this week, triggered by concerns over AI-based valuation bubbles. Nvidia's earnings report, which was better than expected, has not been able to alleviate market unease.
Emphasizing that bitcoin prices are still more than double compared to 2024, after major institutions like BlackRock began launching crypto products and investments.
Over the past 1.5 years, the crypto sector has performed very, very well, so it is not surprising that people are taking profits. Every period of consolidation is actually healthy for the industry, providing an opportunity to take a breather and find new footing.
