Why does Bitcoin fall when it rises (Why does Bitcoin rise but still get margin called)?

08/13/2023 09:47 • AI & Tech Insights • 82 views

Why does Bitcoin fall when it rises? Why does Bitcoin fall when it rises? Why does Bitcoin experience a drop when it rises, and why does its price hover around $10,000 without dropping?

Firstly, extreme market panic and impatience lead to selling pressure in the market. When the price drops, people often have a common thought: if Bitcoin doesn’t break this support level, it will soon drop below $9,000. Conversely, if BTC fails to rebound to the low range of $9,300-$9,400, investors will view it as a bubble. Many people claim that Bitcoin is a scam, but it is actually a typical investment concept. They think these claims are exaggerated and unnecessary to be described as “faith.” Therefore, these people are not unfamiliar with cryptocurrency, and some even believe in it. However, for some altcoins, their tokens are only a part of speculators and do not have actual value.

Secondly, there is the game between exchanges. The trading volume between exchanges is massive, making it difficult for many users to engage in effective arbitrage activities. However, this situation often occurs – exchanges engage in off-exchange matches to go long or short, leading to significant losses. As more and more institutions participate on the platforms, funds flow into the market, creating a balance. Since exchanges are centralized financial service providers, they either control their business or cooperate with each other, increasing transaction costs. Of course, this is also a problem. If exchanges have sufficient liquidity but cannot provide stable services to customers, there is a higher probability of runs or forced closure.

Why does Bitcoin margin call happen despite the rise?

According to btcmanager, since December last year when Bitcoin rose to $10,000, many investors have been concerned about its future. They believe that Bitcoin’s price will continue to rise but haven’t experienced a bull market like in 2017. It is argued that in the current market environment, failure to keep up with the market trend (e.g., ETH/BTC) quickly may result in margin calls.

According to statistics from data analysis company Coinmetrics, as of 9 a.m. on November 19th, Bitcoin’s 24-hour trading volume was around $2.8 billion, while Ethereum’s daily trading volume was approximately $2.3 billion, totaling over $200 million. Bitcoin’s average turnover rate for 30 minutes is 0.05%.

Another notable data is the increase of holding addresses for BitMEX XBT perpetual contracts. Currently, the number of holding addresses for BitMEX XBT perpetual contracts has exceeded 60,000.

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Why does Bitcoin fall when it rises (Why does Bitcoin rise but still get margin called)?

Why does Bitcoin margin call happen despite the rise?

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