NEW YORK - Bitcoin's recent surge to the $38,000 mark has sparked a flurry of trading activity, resulting in the largest liquidation event since the August 17 flash crash, with $491 million worth of positions being wiped out. Bitfinex, a prominent cryptocurrency exchange, has issued an investor warning in response to this volatility. The alert comes as the digital currency's market capitalization is on the brink of reaching a significant milestone of $750 billion for the first time since April 2022.
Bitfinex's Alpha report pointed to the gap between Bitcoin's current price and the Short-Term Holder Realized Price (STH RP), which is at its widest margin since April 10, 2022. This disparity could signal a local peak and potentially precede a pullback in Bitcoin's value. According to Bitfinex, a month-over-month change exceeding $2,000 in the STH RP often indicates the final stages of a bear market recovery and the start of a new bull market. However, with the STH RP currently standing at $30,380 while Bitcoin trades around $37,000, there is growing concern about a possible retraction to the $30,000 to $31,000 range, testing the STH RP level.
Furthermore, Bitfinex's report highlights a negative shift in Long-Term Holder Realized Price (LTH RP), suggesting that long-term holders may be liquidating their Bitcoin holdings. Since December 2022, Bitfinex has been closely monitoring these trends and advocating for investor prudence during what they have referred to as Bitcoin's recovery phase.
The exchange has consistently warned of potential significant price corrections despite discussions around the emergence of a new bull market. These warnings underscore the dynamic nature of STH and LTH levels and their impact on market movements.
As investors navigate this tumultuous landscape, Bitfinex stresses the importance of vigilance in trading strategies and risk management. The recent advisory serves as a reminder that while milestones like reaching a $750 billion market cap are noteworthy, they can also be accompanied by increased market sensitivity and potential volatility.
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