xrp crypto stock

XRP, DOGE, ADA, ETH, BTC take heed of Big Short legend’s warning: “Mother of all crashes”

Finance Feeds logo
Written by publisher team

“When cryptocurrency drops from trillions, or meme stocks drop from tens of billions, #MainStreet losses will approach the size of countries.”

Michael J. Perry, founder of Scion Capital who became a legend for his portrayal of Christian Bale in Big Short, warned the “mother of all crashes” due to FOMO (fear of missing out) in cryptocurrency and meme stores.

The hedge fund manager best known for shortening the 2007 subprime mortgage market by swapping secured debt obligations (CDOs) — in other words, who was among the first investors to anticipate and profit from the sub-prime crisis — recently cited crypto leverage as the main driver of the movements. .

SEC’s Crypto Mom Says Ripple’s XRP Doesn’t Have to Be a Security

“The problem with #crypto, as with most things, is leverage. If you don’t know how much leverage is in crypto, you don’t know anything about crypto, no matter how much you think you know.”

Last week, FinanceFeeds published a feature article focusing on leverage as the driver of the cryptocurrency crash in May. While regulated trading firms in more reliable jurisdictions offer limits on responsible leverage, other firms push it to the limits.

“All the hype/speculation is to catch retail before all the crashes happen. #FOMO Parabolas don’t solve sideways; when cryptocurrency drops from trillions, or meme stocks drop from tens of billions, #MainStreet losses will approach the size of countries. History remains unchanged” Mr. Barry He said In a deleted tweet, it was recovered by Michael Burry’s deleted account (“michaeljburry deleted me, but it’s the internet”).

The cryptocurrency market has been bleeding again in the past few days, after it “collapsed” in May in what was called a healthy correction from all-time highs.

At that time, Bitcoin (BTC) fell from 65,000 to 30,000, Ethereum (ETH) fell from 4380 to 1732, Binance Coin (BNB) fell from 692 to 212, Cardano (ADA) rose from 1.77 to 1.26, and Dogecoin ( DOGE) decreased from 0.74 to 0.22, Polkadot bleed (DOT) decreased from 49.75 to 13.81, and Polygon (MATIC) decreased from 3 to 0.75.

Natalia Zakharova, Head of Sales at FXOpen, said that the cryptocurrency crash came as an unpleasant surprise to asset owners despite the long-awaited high volatility. The second book model comes to mind when discussing high leverage.

“I have some serious doubts about how places offering 1:100 leverage on cryptocurrencies will cover their positions. I see more damage in retail investors who flock to buy cryptocurrencies expecting their uptrend to continue forever and ignoring all the risks involved.”

“The massive growth seen in cryptocurrencies between late 2020 and April 2021 is largely due to big players like Elon Musk supporting the market, but retail traders have been keen to ride the wave higher as well,” said David Madden, market analyst at Equiti Capital.

“Margin trading has helped retail traders get exposure to cryptocurrencies but as we saw in May, cryptocurrencies have suffered a painful decline. The crash of cryptocurrency last month has highlighted the risks associated with using leverage to trade assets. Retail traders should be aware that leverage can accelerate from the height but it also falls down.”

“While this allows for larger gains in speculative trading, it significantly speeds up losses,” said Natalia Honek, Head of Revenue at Advanced Markets.

“The type of volatility that we see in crypto assets is uncommon with respect to traditional financial instruments, and due to the combination of lower liquidity than traditional assets and higher volatility, excessive crypto trading has a greater chance of creating a cycle or trend, and ultimately driving the price of the crypto asset lower.” .

Today, Bitcoin is down more than 17 percent near the $33,000 mark and the cryptocurrency market cap has dropped below the $1.5 trillion mark.

SEC v. Ripple: When does the lawsuit end?

About the author

publisher team