Traders are currently using heavily leveraged funds to trade cryptocurrencies in an attempt to make a quick profit.
Even a small correction in digital assets and increased uncertainty leads to sharp declines, experts complain.
"On average, nearly 300,000 traders liquidate positions daily. The market has become extremely sensitive to news: one post or headline can trigger a chain reaction. This is especially noticeable amid news related to Donald Trump," The Kobeissi Letter reported.
Large investors are not putting pressure on cryptocurrency prices, as they benefit from the chaotic behavior of retail traders—corporate players gain favorable entry points while smaller players are hurting themselves, according to analysts at The Kobeissi Letter.
The crypto market is not in danger in the long term, but short-term price fluctuations are becoming increasingly sharp. In the coming weeks, both significant drops and rapid rebounds in virtual assets are expected, the experts said.
Earlier, analysts at Wintermute reported that the main reason for the crypto market's decline was the redistribution of liquidity, not a lack of it, as is commonly believed in the community.