Anticipating Leverage Reduction for Subsequent Bitcoin Advance: Evaluation by Expert
Crypto Market Watchdog: "Steer Clear of Bitcoin Bets," Warns Willy Woo
In a recent tweet on June 2, tech analyst Willy Woo acidly stated, "Forget about placing paper bets on BTC. This is the ideal time for liquidation hunts due to sky-high gambling levels." He cautioned that Bitcoin is "hanging tight, waiting to cleanse itself of these bets before the next ride to ATHs."
Paper bets usually entail crypto derivatives like futures, options, and perpetual contracts. These instruments allow speculators to wager on the asset's direction without actually holding it. Woo claimed that these "casino hitchhikers" are swarming the spot market, making it hard to push Bitcoin prices upward.
Liquidation's Looming
Derivatives traders primarily employ leverage, which boosts market temperature and volatility. And when liquidated, they create a chaotic frenzy, especially when the market starts to implode.
Last week's $100M liquidation of Hyperliquid whale trader James Wynn was explained by Woo. According to him, buying pressure was weak last week, giving whales the upper hand. "In neutral environments, it's a breeze to manipulate prices, especially on weekends and during summer months," he warned. "Now, with the added incentives to generate liquidations, we're primed for liquidation hunts right now."
Bitcoin's open interest (OI), or the number of unresolved futures contracts, hit an all-time high of $80 billion on May 23, according to Coinglass. Despite falling to $72 billion, the OI remains elevated, indicating numerous open bets or borrowed positions in the market.
When OI surges, it signals a build-up of vast leveraged positions. When the actual BTC price move goes against these positions, traders are forcefully liquidated, causing a domino effect, escalated selling pressure, and steep price drops, accompanied by ferocious volatility spikes.
Bitcoin's Price Projection
Bitcoin prices have slightly climbed today, peaking at $106,450 before sliding back to approximately $105,350 during Asia's morning trade. After falling from its May 22 ATH, BTC has stayed in a holding pattern around current levels for several days. Although it looks mighty on long-term charts, it might display increased volatility if Woo's "casino hitchhikers" get liquidated.
Curiously, the M2 money supply recently touched an all-time high, making headlines for risk-on assets like crypto.
Bitcoin (BTC) Price Facebook Twitter LinkedIn Telegram
Bonus Reading:
Some analysts anticipate astonishing Bitcoin price increases in 2025. For example, a fanciful options trade bets on BTC hitting $300,000 by June 27, mirroring the bullish sentiments in the options market. Other predictions predict prices up to $120,000, given current trends.
Institutional adoption of Bitcoin, with corporations like MicroStrategy hoarding it, is viewed positively for the asset's price.
- Willy Woo warned in a recent tweet that due to high gambling levels, this might be an ideal time for derivatives traders to hunt for liquidation, as Bitcoin is "hanging tight, waiting to cleanse itself of these bets before the next ride to ATHs."
- Derivatives traders, who mostly use leverage, can create a chaotic frenzy when liquidated, especially when the market starts to implode, as demonstrated by last week's $100M liquidation of Hyperliquid whale trader James Wynn, where buying pressure was weak.
- The open interest (OI) of Bitcoin, which represents the number of unresolved futures contracts, hit an all-time high of $80 billion on May 23, indicating numerous open bets or borrowed positions in the market.
- Bitcoin's price might display increased volatility if there is a liquidation of the alleged "casino hitchhikers," according to Willy Woo, as these market participants use derivatives like futures, options, and perpetual contracts, which can swarm the spot market, making it hard to push Bitcoin prices upward.
