The lesson from current crypto carnage: 'Short-term traders must be careful'
The cryptocurrency market is known for its extreme volatility.
But investors are reeling at the latest fall in crypto, led by Bitcoin.
The rout was prompted by China's announcement that the country won't accept digital coins as a form of payment.
This also followed Elon Musk backtracking on his enthusiasm for Bitcoin because of his disapproval of its energy consumption.
But China's stance is actually nothing new says Farzam Ehsani, co-founder and CEO of cryptocurrency trading platform VALR.com.
This has been China's position for a few years and [today] was just a reiteration of that same position. Yet some people viewed this as new news for the market and started selling.Farzam Ehsani, Co-founder and CEO - VALR.com.
The crypto markets are often very leveraged, so once you see a bit of a downturn... you see liquidation of a tremendous amount of orders as well.Farzam Ehsani, Co-founder and CEO - VALR.com.
In the last 24 hours we saw liquidation of $8.6 billion just in Bitcoin!Farzam Ehsani, Co-founder and CEO - VALR.com.
Bruce Whitfield gets insight from Ehsani on The Money Show.
We need to take a little step back and look at the bigger picture, says the VALR.com CEO.
He notes that without its volatility, Bitcoin would not be as completely independent and uncorrelated as it claims to be.
In view of all this, when is a good time to get into crypto?
Ehsani says he's still very bullish about the market over the longer term.
In the short term, nobody knows where this is going to go. Every short-term trader must be very careful.Farzam Ehsani, Co-founder and CEO - VALR.com.
The problem right now is that no-one quite knows how to value Bitcoin, and therefore when there are pieces of good news it goes up and when there are pieces of bad news it goes down.Farzam Ehsani, Co-founder and CEO - VALR.com.
The point is that if you're trying to get in [to crypto] at a particular price... you should take a step back to say 'What is this technology and what is this asset class offering to the world and how do I view that over the longer term?'.Farzam Ehsani, Co-founder and CEO - VALR.com.
Listen to Ehsani's insights in detail below:
This article first appeared on CapeTalk : The lesson from current crypto carnage: 'Short-term traders must be careful'
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