Crypto asset corrections are considered only temporary

Reporter: Hikma Dirgantara | Editor: Wahyu T. Rahmawati

KONTAN.CO.ID – JAKARTA. The crypto asset market has been under constant pressure in the past week. Crypto asset prices, which had skyrocketed, are now falling. Referring to the coinmarketcap.com page, the five crypto assets with the largest market cap have all experienced corrections in the last seven days.

Bitcoin, for example, in the last week was recorded to have corrected up to 18.23%. Meanwhile, Dogecoin, which had skyrocketed, in fact also performed negatively by dropping 11.40%. In fact, Ripple (XRP) experienced a correction of up to 29.16%.

Bullwhales Managing Partner Douglas Tan explained, in the past week there have indeed been two major corrections in the crypto asset market. The first correction was on April 18 yesterday, when the Bitcoin price had reached US $ 60,500 and the lowest price reached US $ 51,000 per Btc.

Douglas said, during that period, the majority of players in the world were trapped in positions over-levered, where they trade beyond the capabilities of their initial capital. He gave an example, a speculator has a capital of $ 100, but has a 100x margin position, as if he has a capital of U $ 10,000 to make transactions.

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“At that time, there was a negative sentiment in the form of hash rate which decreased drastically due to several miners in several regions of China experiencing disruption of operations. In the end, this moment was used by several parties to pursue the liquidation point of speculators who were in position over-levered earlier, “explained Douglas to Kontan.co.id, Friday (23/4).

Even so, Douglas said at that time, there had been a price reversal. This happens as big players get into positions short, have to do short cover, that is, closing the position short by way of doing long at its closing price.

Meanwhile, in today’s trading, Douglas said, the correction in crypto assets occurred due to a lot of selling underlying asset like BTC on the spot market. This is also because of Fear Uncertainty Doubt (FUD) regarding Joe Biden tax plan who do not side with the people who have high income.

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“The reaction continues to be bumpy, and causes a decline in prices with little chance of an instant reversal. This condition is different from crash that occurred on April 18th when there was a large chance of an instant reversal through activity short covering, ”Added Douglas.

However, Douglas believes, the current correction is only short-term. Meanwhile, in the long term, he is still optimistic that crypto asset prices will continue to be bullish.

Factors such as the projected US Securities and Exchange Commission (SEC) approving the Bitcoin Exchange Traded Fund (ETF), to the penetration of public institutions and companies that purchase crypto assets and put them on their balance sheets are considered to be positive catalysts for crypto assets.

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