Bitcoin’s leverage-fueled volatility

Massive spikes and troughs in the digital coin’s price trajectory
Bitcoin volatility is easy to spot. One look at the bitcoin’s futures price chart shows it is not a trade for the faint-hearted.
The most popular digital coin future plunged a low of around $3,200 in December 2018. But by early June 2019, bitcoin shot up to a high of nearly $14,000.
The cryptocurrency now sits at $11,990, down more than 14% from its recent peak.
Leverage, leverage, leverage
According to Jeff Dorman, the CIO of asset manager Arca, only a part of bitcoin’s sharp ascendancy from $3,200 can be explained by fundamental factors. In his assessment, the rise from around $10,000 to $14,000 was purely speculative and fuelled by traders’ use of leverage.
The subsequent volatility in bitcoin was also caused by leverage, which can be used to play both the long and short sides of a trade.
“No new money came in or out… it was just levered bets. And levered bets cause massive volatility on the way up and down,” says Dorman.
The bright side of Bitcoin volatility?
The bright side to this, if you can call it that, is that the everyday investor has still not got into the act, and has therefore been saved the volatility and/or losses.
Only institutional investors and large speculators have been active during this phase.

Latest Alternative Investment News

Digital Assets: WhatsApp Alternative Signal Said To Be Developing Crypto Payments
An investigation report by Platformer’s Casey Newton says messaging app Signal, which promotes privacy through end-to-end encryption, without any commercial motive, is in turmoil. Downloads of the app after Facebook’s…

Liquid Alternatives/Private Equity: A Mackenzie Mutual Fund Offers Private Equity Exposure To Retail Investors
The Mackenzie Private Equity Replication Fund is a new mutual fund from Mackenzie Investments launched earlier this month. Mackenzie is active in liquid alternatives, and this is its sixth fund…

Venture Capital: Matrix Partners China Raises $1.2B For Sixth Fund
Matrix Partners China, an affiliate of Matrix Partners, the U.S. venture capital firm, has raised $1.2 billion for its sixth China fund according to an SEC filing. It is an…

FinTech: Kamath’s Rainmatter VC Incubator Mulling Alternative Investment Fund
Indian entrepreneur Nikhil Kamath, who achieved fame and fortune by bootstrapping Zerodha, India’s first discount broker, to unicorn status, is setting up a fund for investing in fintechs. Rainmatter, Kamath’s…