Why the weekend seesaw in the Bitcoin price?

‘Remember that cryptos are really leveraged. There’s a ton of debt in the space. People take out incredible amounts of debt to buy crypto’: Revix founder Sean Sanders.
Image: Ozan Kose/AFP

SIMON BROWN: I’m chatting now with Sean Sanders from Revix, the founder at Revix. Sean, I appreciate your time this morning. Bitcoin over the weekend – on Friday evening it was around $54 000 per Bitcoin. Suddenly I have a look on Saturday morning, it’s $42 000. It has recovered. It’s now trading around $50 000. What happened? Was there something, or was this just someone taking profits, or volatility that we sometimes see in assets, specifically crypto?

SEAN SANDERS: Thanks, Simon. That’s one of the questions that I think everyone’s been asking. I looked into this, and all the top fund managers who are in the crypto space are looking into this. There isn’t just one reason. My assumption would be that the new variant has scared the market – that crypto is seen as a sort of risk-on asset class. So when the going is good, when interest rates are really low, when people and companies are plowing into tech stocks, crypto moves naturally when that all changes. That seems to be what happened with the variant being announced – the market moved onwards. That’s what seemed to happen.

Remember that cryptos are really leveraged. There’s a ton of debt in the space. People take out incredible amounts of debt to buy crypto through the various leverage platforms. That makes it really risky as well, because when a move happens where crypto moves down, let’s say 5%, that gets exacerbated. My plea to all retail investors out there: please don’t trade crypto with leverage. I know too many people who have been burnt.

SIMON BROWN: I’m a trader and I trade geared product. I don’t trade geared crypto. Crypto has enough gearing, as you say, baked into it.

The market response – I was tweeting about it on Saturday morning and trying to get a sense.

What I did notice was that there was no panic. If this was happening in an S&P 500 or a Top 40, there would be panic. The crypto investors, traders, are used to this. If anything, they were probably picking up some cheaper coins.

SEAN SANDERS: That’s a very good point, actually. Here’s a fun factor – the four days after that real hard selloff were the four best days in Revix’s history in terms of deposits. Customers came flying in to buy the dip and [with] really big deposits, really big purchases. That’s what drove the market back up. So those customers that did land up buying the dip at that point in time are obviously smiling. They’ve made a really good return over a short period of time.

But I think this is part and parcel of the crypto market.

Is volatility going to go away? No, there’s tons and tons of leverage in this space.

Go and look at sort of the notional trading volumes in the derivative space when you’re looking at the crypto scene. It’s just crazy. You’re looking at billions and billions being traded every hour, never mind every day. That’s going to remain there. There are more platforms emerging that offer leverage.

I always think of the Super Mario game, where Super Mario would run along and sort of jump up and then get all these coins. That’s what it’s like from some of these leverage platforms because, when the market volatility hits, whether there’s a sharp move up or a sharp move down, the platforms are the ones making the money. Very seldom is it the retail investor.

I always say, stay away from leverage in the crypto space – probably my most important bit of advice.

SIMON BROWN: I will echo that. I found an exchange, let’s be quite clear, it was a dodgy exchange. I think I’ve mentioned before their Fica requirement was ‘Please send us an email address’. They were offering a thousand times gearing and I thought, maybe not. Not only were they the ones making the money, but I wasn’t sure they would be there tomorrow with my crypto. So I left them on their little island there.

There’s more I want to chat around, but we are going to chat towards the end of the year on more of a review. You’re running a promotion for guessing the Bitcoin price. Quickly fill us in on that.

SEAN SANDERS: Sure. [On] the Revix platform, you’ll see the coolest looking set of cufflinks that you’ll ever see in your entire life. They’re the Bitcoin cufflinks. Go and take a look at them. They cost roughly £300, so they’re not cheap. If you are able to go out – and it’s as simple as this – go and guess the Bitcoin price come the end of the year. If you’re right, bingo, you’re going to win those cufflinks. We’ve got quite a few to give away. We want people just to have a bit of fun in the crypto space.

At the end of the day there is a lot of speculation over the short term at Revix. We want people to be longer-term focused, hence we offer our bundles. Why not speculate over the short term and win some cufflinks – why not?

SIMON BROWN: £300 cufflinks. Those are quite some cufflinks. We’ll leave it there. Sean Sanders at Revix. Go across to Revix.com. See if you can get the price by the end of the year. You could be a million miles out or you could be on the nose. I’m going to give it a shot. Sean, I appreciate the early morning time.

Listen to the full MoneywebNOW podcast every weekday morning here.


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