The crypto sector is prolonged, bearish, and sluggish, which has been precipitated by the hawkish statements of the Federal Reserve. With Bitcoin (BTC) values fluctuating between $18K-$19K. Experts like Jason Goepfert, a significant crypto influencer, warn that a complete crypto crash is just around the corner.
As per Goepfert, the retail investors shelled out $20 billion in the past seven days to buy put option protections. He reveals this to be a record high. Jason hinted that the leveraged traders are expecting a crypto crash soon.
Why A Crypto Crash Is Foregone Conclusion
The Fed Reserve is set to take extreme measures to rein in inflation. Further austerity measures include quantitative tightening to offload their balance sheets which became bloated during the pandemic. Already the Fed reserve has increased the interest rates thrice by75bps. There are fears that if the inflation rate is not controlled, the Fed could think of a 100bps hike before the end of the year.
Experts around the globe are warning about an eminent recession in the future. The World Bank has warned that the global economy is heading toward a recession. If the Fed Chair follows the path of his predecessor, Paul Volcker, the economy will go into recession.
How Crypto Traders Are Protecting Themselves From Crypto Crash
Retailers are also digging in to protect themselves and have spent a record high on buying put options. A put option is right given to an investor where he is not obliged to sell the asset and is often considered a negative benchmark for the underlying asset’s value. Investors have put in $46 billion in index futures net short.
However, there is no lack of divergent opinions. One such person who holds differing views is Michael van de Poppe, a significant crypto analyst and the CEO of Eight Global. He believes that a crypto rally is imminent, and the present scenario can be labeled a short-squeeze when a shorted stock rises and compels the short sellers to sell their position at a loss.