The cryptocurrency market is undergoing some major changes at present. On one end, the matter of the traditional banking crisis is not solved; there is also looming trouble from the regulators on the matter.
To this end, Hedge Fund founder Hal Press has recently issued a warning for cryptocurrency investors. He heads the North Rock Digital firm and has shared a possibly troublesome future for the crypto market.
He has refrained from projecting any type of massive price crashes for DeFi. At the same time, he has also maintained that the crypto sector has enough accumulated strength to withstand any possible setbacks or shocks in the coming days.
His main concern for crypto involves regulatory pressures in the short term, in addition to a decrease in market liquidity. He claimed that on account of the depleting crypto liquidity, there might be a possibility of a short squeeze in the near term.
Press has predicted that there is a strong possibility for a short squeeze. For context, it is worth mentioning that a short squeeze happens when the prices of crypto rise quickly, forcing short position holders to buy more currencies to avoid losses.
The increasing buying pressure, however, leads to further increases in the price of the ground asset class, which is called a squeeze. In such a situation, the investors who have betted against the positive market development can suffer from losses.
CoinGlass data has revealed that the total number of short positions in crypto is higher in comparison to long alternatives. The analytics report projects that around 50.69% of crypto investors are currently expecting Bitcoin prices to take a dip.
On the other hand, the analysts at the firm have maintained that the price dip projections for crypto are limited to the short-term duration, and investors are positive about crypto development in the long run.
He also pointed out the factors to consider for the Ethereum token, maintaining that the next update, named Shanghai, is set to add 16 million additional ETH. The update is set to arrive on 21st April, and it is bound to a sudden increase of 14% supply.
Increasing Regulatory Scrutiny
On the other hand, he has also expressed some concerns about the increasing regulatory scrutiny around the globe towards the crypto sector. He pointed out that the political leadership in Japan, Germany, France, the USA, the UK, and the EU are taking a stringent stance on crypto.
He claims that top currencies may have inelastic demand since Binance has recently converted $1 billion worth of BUSD into Bitcoin, BNB, and Ethereum tokens from their Industry Recovery Wallet. He claimed that the price would dictate the market direction for crypto investors.
He also shared that the market can move in either direction, but investors must be aware of all the important factors to make better trading decisions.
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