Tuesday, 02 January 2024 12:17 GMT

Bitcoin's $1 Trillion Shakeout Is 'Leverage': Devere CEO


(MENAFN- Investor Ideas) Investorideas ( Newswire) a go-to platform for big investing ideas, including crypto stocks issues market commentary from deVere Group,

Bitcoin has erased more than a trillion dollars' worth of crypto market value in six weeks, forcing the market to confront how much borrowed money had been propping up positions across the sector.

This is the analysis of Nigel Green, CEO of one of the world's largest independent financial advisory organizations as global stocks and risk-on assets extend losses.

In this context, 'leverage' means some traders had been using borrowed funds to boost the size of their positions.

When prices fell, those positions were automatically closed by exchanges, creating forced selling that intensified the decline. It is a mechanical process that can make routine pullbacks look more dramatic than the fundamentals justify.

Nigel Green, CEO of deVere Group, says this leverage reset is the core driver of the current crypto downturn.

He adds that the sell-off is unfolding against a backdrop of broader unease. Investors are focused on softer labor-market signals, the sustainability of AI and tech valuations, tariff effects under President Donald Trump's administration, and the direction of US interest rates.

These factors have created a cautious mood across speculative assets.

deVere's analysis indicates that the market is being driven more by sentiment than by long-term fundamentals.

Pricing already reflects a substantial degree of caution. As clarity emerges on labor-market trends and policy signals, confidence can be expected to rebuild quickly.

Nigel Green concludes:

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