Never trade this asset with leverage!

Last Updated: 6. März 2024By

Yesterday it happened again: Bitcoin has plummeted significantly. In the peak by over 14 percent! Numerous private investors who had geared themselves towards rising prices were caught off guard. For stocks like Marathon Digital and Coinbase, both of which react to the Bitcoin price, there was also a reaction. However, not as expected.

Bitcoin in the daily chart The green line was the old all-time high. At this point, some participants had probably placed a sell order – or took profits, which ultimately amounts to the same thing. The result: prices fell by 14.29 percent and certainly triggered plenty of stop losses and closed numerous margin accounts.

(Source: Such an intraday crash happens again and again, yet many investors make the mistake: They trade leveraged cryptocurrencies. Most do not plan for sufficient buffer downwards. This is precisely why it is also worthwhile for the big players in the market to quickly push the price down.

You can see in the chart that the prices were immediately bought up again. It is obvious that Bitcoin was not the problem, but rather private investors who wanted to make quick money with too much leverage.

The fact that it happened exactly at the 2021 all-time high makes it even more reprehensible. Because here, there can always be a counter-movement. But greed knows no bounds, especially in the crypto area, and so many speculators have probably already seen Bitcoin in the six-digit range.

The price can come, but just not tomorrow. Apart from that, I do not understand why one has to trade Bitcoin with leverage. The value already fluctuates enough. Those who need more action simply have to choose coins with less market capitalization. They will rise faster when Bitcoin pulls everything up.

Marathon Digital predicted the setback For whatever reason, the prices of the US-based crypto mining company had already reversed on February 28. While Bitcoin continued to rise for a few more days, the highest point had already been reached here.

(Source: It was similar in December 2023. The prices of MARA did not go any higher, but even fell. At the same time, Bitcoin continued to climb a little further. Only to then drop by over 20 percent more than 2 weeks later. It seems that we should continue to keep Marathon in mind if we can take the stock price as an early warning signal for Bitcoin.

However, this theory is not set in stone. When Bitcoin hit its all-time high in 2021, Marathon Digital was also at an all-time high.

In the chart, you can see my buying zone around $18. Unfortunately, we still need quite a bit to get there. We will probably need temporary support from the Bitcoin bears.

Coinbase is running away While we were able to see a setback with MARA, the Coinbase stock is showing no signs of it. Of course, it also fell briefly yesterday – but is already higher today. Apparently, we will not see my desired buying zone around $130 anytime soon.

Coinbase is now trading at $232, only $200 away from its all-time high. However, the all-time high of $430 is of little significance here because it comes directly from the IPO in April 2021. More interesting is the fact that even at the time when Bitcoin hit its all-time high in 2021, the prices only rose to $370.

Conclusion Leverage is completely legitimate for certificates or CFDs. But with cryptocurrencies, the fun stops. There is too much movement in them, and the portfolios of private investors can quickly go up in smoke due to flash crashes.

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