Current currency market disrupted: I invested in encryption? Bitcoin may go to a 2020 -like crash? Here is what the industry expert says

If you are holding Bitcoin or other encrypted currencies, you may want to rethink your position. Tara McColaiThe CEO of Pharos Fund and the former founder of Alaeda Research has raised concerns about the collapse of a potential market that could repeat the collapse in 2020, the street said.

An expert warns of the collapse of the potential market

MCAULAY has warned that merchants may reduce the risk of a widespread liquidation event that occurs in the next three months, or over the year 2025, according to the report. While Bitcoin suffers from a decrease in fluctuations recently, the financial lever in the market is quietly increasing, and this may pave the way due to a significant decrease in prices, the street said.

According to Street Street, it was identical between the market today and March 2020, when Bitcoin futures decreased by 85 % in just one day, which raised one of the largest liquidation events in the date of encryption. During this incident, the market value of Bitcoin decreased by about $ 40 billion, and drowned to about 107 billion dollars, according to Coinmarketca.

Do merchants bear a lot of risks?

MCAULAY indicated that many Bitcoin traders benefit from their locations with a 6X or 7X margin, betting that the price of Bitcoin will not fluctuate much, according to the report. But she warned, even that the decrease in modest prices by 20 % could lead to a “series of tangles”, causing huge sales and may escalate the market failure, the street said.

In addition to the risk, the scene of encoding has turned significantly since 2022. Unlike before, when the leverage spread outside the exchange, more leverage focuses on the stock exchanges, the street said. This means that in the event of a decrease in prices, the liquidation process may be faster and more severe.

Could Bitcoin be already in the bear market?

MCAULAY also suggested that Bitcoin may already be in the early stages of the bear market, although most investors do not realize this yet, according to the street. She explained that it takes a few months of prices for people to officially designate the market. One of the main red flag I highlighted is the sharp decrease in trading sizes, which has decreased by 40 % since December. While Bitcoin’s investment funds continued to attract institutional investors, retail sharing has declined and fewer new money flows, according to the street. According to MCAULAY, “If we get a decrease in those flows, if they stop, if there is anything that scares people, and you collect it with the sale activity that we already see, you can get a large crash,” as it was reported by the street.

Bitcoin was traded at 96,289.79 dollars, indicating a 0.7 % decrease, as of February 20.

Common questions

Do you should worry about bitcoin?
Tara McColai, an encryption expert, raised concerns that bitcoin could tend to a major crash, such as what happened in 2020. She claimed that many merchants overlook some risks, especially with the amount of financial lever crawling to the market.

Is Bitcoin already in the bear market?
MCAULAY claimed that we may already be in the early stages of the bear market, even if many people have not noticed yet. It usually takes a few months of price drop before the market officially called the bear market.