William Clemente III, a prominent on-chain analyst and co-founder of Reflexivity Research, made comments via posts on social media platform X on December 5 and 11.
The cryptocurrency market, particularly Bitcoin, has seen quite a bit of volatility in recent days. Last Friday, Bitcoin hit a yearly high of $44,715, but has since seen a decline and is currently trading around $41,420. This represents a 4.47% decline over the past 24 hours and a 7.36% drop from Friday’s peak.
Clemente’s Analysis
On December 5, Clemente acknowledged the positive price action but warned of potential sharp corrections. He highlighted that the market could experience declines as it eliminates “greedy leveraged long positions.” This refers to traders who borrow capital to expand their investment in anticipation of the asset’s price rising. High leverage can lead to significant profits but also substantial losses, especially in a volatile market like Bitcoin.
He advised keeping Bitcoin in “cold storage” as a safer strategy. This is a method of storing cryptocurrency offline, reducing the risk of hacking and theft. It is considered a safer way to hold digital assets, especially for long-term investments.
On December 11, Clemente noted that Bitcoin nearly doubled in value in two months without significant pullbacks, suggesting a correction was not unexpected. He explained that corrections are beneficial as they “stretch weak hands and leverage,” creating a stronger foundation for future growth.
Weak hands describe investors who rush to sell their holdings at the first sign of falling prices, often driven by fear or a lack of conviction in their investment strategy.
In this context, leverage involves using borrowed funds to increase investment exposure. High leverage can lead to higher losses during market corrections. Clemente emphasized that Bitcoin’s volatility is inherent and should be seen as a feature and not a flaw. He discouraged excessive use of leverage in trading.
Demirors’ Opinions
Meltem Demirors, Chief Strategy Officer at Coinshares, recently shared her thoughts on CNBC’s “Fast Money” about the growing optimism in the cryptocurrency market, with a focus on Bitcoin’s recent rally and its implications for digital assets as they 2024 is approaching.
Demirors noted Bitcoin’s remarkable recovery, highlighting its rise above $44,000, marking its third consecutive week of gains and a significant rebound from the beginning of the year.
She reflected on the resilience of the cryptocurrency market amid the challenges of 2022, including bankruptcies, fraud, and regulatory hurdles such as the Binance ruling and Changpeng Zhao’s settlement with the SEC.
Describing 2022 as a difficult year for the cryptocurrency industry, she called the current trend “the most hated rally,” and emphasized the sector’s comeback despite general fatigue around cryptocurrency discussions.
She attributed the rally to several factors, including possible changes in Federal Reserve policies and concerns about the US deficit, which could be driving interest towards digital assets. Demirors also pointed out the reflective nature of the Bitcoin market, in which price changes spur greater activity.
Highlighting the growing retail interest, Demirors cited a report from Square (now Block) showing significant Bitcoin trading volumes on its Cash App. It also noted a 4% increase in global crypto ETP assets under management over the year, indicating steady inflows.
Looking ahead, Demirors expressed optimism about the upcoming Bitcoin halving event, which could positively impact its price by reducing daily mined supply. She also estimated a high probability of spot Bitcoin ETFs being approved.
Despite the rise in retail interest, he noted that major institutional investors are still cautiously approaching the crypto space.
By Leonardo Perez
