According to Garrett Jin, the correction that began last October has almost completely removed speculative capital from the bitcoin market by retail traders. This sharply reduced liquidity and made investors more cautious. Now they prefer a wait-and-see strategy. At the same time, some small players from the U.S. and Asia reallocated funds to other assets, Bits.media writes.
“The aggressive growth of artificial intelligence (AI)-related stocks in China, Japan and America has absorbed significant amounts of liquidity. A similar effect caused a rush in demand for precious metals,” explained the former head of BitForex.
The vulnerability of the bitcoin market, according to the analyst’s assessment, is exacerbated by the high proportion of inexperienced participants. Popular market judgments like “four-year cycle” are nothing more than a tool to influence the mood of traders, Jin believes.
“Such simplistic attitudes allow exchanges and market makers to actively manage the mood of the crowd”, – said the expert.
He compared the current state of bitcoin to the situation on the Chinese stock market in 2015. Then, after the stock bubble collapsed, quotes moved in a sideways range for several months before moving to a prolonged growth.
Jin considers the trading volumes of bitcoin futures, which remain near historic lows, as a signal of the end of the “cleansing phase.” They indicate that the process of ridding the market of excessive leverage and short-term speculation is almost complete.
