Use Of Leverage Causes Bitcoin Swings, Says Jeff Dorman
When explaining the cryptocurrency’s intense volatility, Jeff Dorman, chief investment officer of asset manager Arca, pointed to traders’ heavy use of leverage.
"The move from $4k-$10k was based on a confluence of real factors (Yuan depreciating, the Fed, etc.), but the move from $10k to $14k, and back to $10k and back to $13k, and back to $11k was all based on leverage," he stated.
"No new money came in or out… it was just levered bets. And levered bets cause massive volatility on the way up and down."