The recent swings in the price of Bitcoin (BTC) have been exacerbated by the presence of leverage, industry experts have said.
The No. 1 digital currency, rose by as much as $2,000 on Wednesday to set a new 2019 high of $13,796.49, according to data from digital currency tracker Coinmarketcap. However, shortly after that the coin pulled back sharply to close the session at $13,016.23. BTC plunged even further on Thursday, falling to as low as $10,491.85, before eventually closing at $11,182.81.
“Even the most optimistic crypto bulls would tell you that a 50%+ move in a week is too much too fast,” Michael Moro, chief executive officer of Genesis Global Trading commented on the recent price swings.
“The presence of leverage exacerbates the moves in both directions and affects the speed dramatically,” Moro told CNBC. “Of course bitcoin has a history of doing this (both upward and downward), but it’s hard to call the magnitude of the move healthy.”
Brian Kelly, CEO and founder of BKCM, also pointed to leverage as the reason for the sharp price swings.
Meanwhile, other experts highlighted the impact Facebook’s plan to launch its own cryptocurrency had on the market. Billionaire investor and prominent crypto supporter Mike Novogratz explain how Facebook’s move could encourage institutional investors to move in crypto.
“One of the largest companies in the world said we believe in cryptocurrencies,” Novogratz said on CNBC’s TV programme “Squawk Box”. “If you’re an institutional investor who’s getting close and still worried about investing, it makes you that much more confident.”
In today’s trading, the Bitcoin price stood at $11,791.75, as of 15:50 BST. The digital currency has gained 0.7% in the past 24 hours. The coin’s total market cap currently stands at $209.7 billion, which represents 62.6% of the combined value of all digital currencies.
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