Bitcoin Hedge Funds: Greed and Leverage Will Prevent Bitcoin Price Rebound

A new investor from the Global Bitcoin Advisory Foundation (GABI) believes that the price of Bitcoin may remain stuck around $800 for a long time.

As of press time, another more technically renowned hedge fund company (founded by former JPMorgan Chase chief trader Daniel Masters) also asserted that the market price of Bitcoin will experience a "brief interruption" after continuing to rise above $1,100 in early 2017.

In short, the company expects that the price of Bitcoin is likely to continue to fluctuate, and due to the many uncertainties caused by this decline, future Bitcoin increases will be difficult to predict.

The report states:

“The recent extreme volatility of Bitcoin prices will undoubtedly have an impact on latecomers, and there will be no opportunity to unwind their positions in the short term. We will see many new investors who entered the market at the high point of Bitcoin prices hoping to “profit” will face round after round of price failures to rebound.”

“In short, the price of the coin will not rise too fast,” it stressed.

In other words, GABI is optimistic about digital currency as an asset class for investment in the long term.

It is worth noting that the report believes that the strategy adjustment of the Bitcoin Exchange Traded Fund (ETF) has helped the market get out of the downturn and may lead to another breakthrough in the price of Bitcoin in 2017.

Reports surfaced late last year that the SEC was taking regulatory action against two apps, one created by New York-based investors Cameron and Tyler Winklevoss and the other by New York-based startup SolidX, as early as March of this year.

GABI advises its investors to continue accumulating Bitcoin assets, resist uncertain market fluctuations, and establish long-term positions, waiting for opportunities to harvest.

"Bitcoin still has considerable room to rise over the past three quarters," the report's author said.

The survey results also cite an exclusive statement from investment bank and asset management firm Needham & Co., which believes Winklevoss has less than a 25% chance of being recognized.

However, it expects that the market will be blessed with up to $300 million in capital in the first week of trading.

Blame it on leverage

However, the report also criticized the Bitcoin market, noting that it is still not sufficient to meet the basic needs of a wide range of investors.

According to the report, Bitcoin traders should be aware that the market is “about to collapse” due to runaway leverage trading.

The report also analyzed the Bitcoin products of two companies, one is BitMEX, a leveraged trading platform from Hong Kong, and the other is a Chinese Bitcoin exchange, pointing out the differences between the two product models.

Overall, it pointed to a lack of standardization as the culprit, with exchanges offering “different funding rates” that far exceeded the risk tolerance of the average user.

Looking at the entire industry market, the temptation of high profit returns has led speculators to invest in Bitcoin at all costs.

The report also pointed out that "as mentioned many times before, local Chinese investors and speculators, faced with weak domestic currency, stock, credit and commodity trading markets, have seen investing in Bitcoin as an investment and speculation opportunity that will not go wrong."

The report concluded:

“If you look around the Bitcoin ecosystem in early January, it’s clear that investors are becoming increasingly greedy.”