Crypto volatility is insane right now

Crypto's been wild lately. Liquidation charts are showing almost $5B in short positions piled up above. If we get a squeeze, things could change real quick. BTC has already dropped 22% this year, and both January and February might finish in the red, which isn’t something we see often. Heard some buzz about new Fed liquidity coming into play. Not sure if it’s legit, but this is definitely a risky setup. You gotta keep a close eye on your risk management and have a hedge strategy in place. I personally like to diversify my risk and use structured programs. That’s part of my hedge strategy mainly focused on protecting my capital. Not saying it’s the best for everyone, but it’s how I deal with the volatility. So, are you preparing for a squeeze or getting ready for another dip?

Liquidation map is mostly something that you should not follow yourself with, the more the marketcap of an asset, the more you will see liquidations in higher amount of money, but that may not translate into highly volatile market. Bitcoin has been less volatile than what it is in years before.

That's not rare even if you'll be specific with those months. Going down after coming from the top isn't rare. Bracing for the upcoming leg down. We're getting the hints but just get ready for that. If it's otherwise, much better because we've anticipated the opposite of it. But if it tends out your readiness is right, you'll not be surprised anymore of what has come.

I would more focus on sentiment instead, I'm not saying liquidation map is not a good tool, moving too fast for me I guess.

I wish more people realized this, it's quite common for the price to fall during these times and we shouldn't be really shocked about it, after all it's the most common way and we should be aware of what the situation at hand is. We peaked and after that it gets into bear market and we are not really shocked that much about it and we should be getting used to it by now and not be seeing this as weird. I get that not everyone understand the cycle between bull markets and bear markets but this is the way it moves and we should be okay with it. Obviously it takes time and we are not seeing this be different for now but as long as we keep realizing the bear market is under way then we are not going to be shocked at these drops.

For me it’s survival first, profits second. It’s evident that the market right now is very unstable. Yes, there’s a lot of short positions sitting on price, which simply implies that if btc goes up fast, the traders could be forced to buy back in and push price even higher, that’s the SQUEEZE. Having said that, it doesn’t guarantee that it would or might happens. Big liquidation levels just show where peopl might get hurt, sometimes the market goes the opposite way first. Concerning the rumors of the FED adding liquidity? If that’s true then it could help price bounce, if it’s false, the possibility of witnessing a fake pump before another drop is high. On my end, I’m not rooting on either direction, I’ll keep smaller positions, manage the risk, stay flexible. In times like this, protecting capital matters more than trying to predict the next big hit. Again, survival first, profits second!

The reality is that we are dealing with something that is getting to a point where volatility is just a way for it to not go down fully, because if it had a straight down then we would all short and make a ton and would buy bitcoin with that, and it would go up, and then it would crash more and repeat so it becomes volatile again. We are just having downs on general, but if shorts get to much, we just go up a bit to cash them out and then go down some more later on. It's just a normal way for markets to move and nothing new. You do not get to see price go up every day for a whole month, same with going down, sometimes it goes up and sometimes it goes down and overall it does one direction but short frames it can do anything.

For any investor that choose to invest in Bitcoin, my advise for them is to buy Bitcoin and hold without bothering about what people think about the crypto market. The crypto market is already saturated and people are giving different signals based on their own perspective about the market. So many sentiments in the market and this is making investors to ask too many questions before they invest because they had been hearing speculations that the price of Bitcoin is going to dip more by next month.

The way the price has been falling and liquidation are happening one after another the public is in extreme fear. You know, when everyone is scared like this the market bottom peek. However that does not mean that all the dangers have passed If you are a trader then you might have noticed there are a lot of short position just above the resistance level. If the market pulls even a little bit upward then these short sellers will get caught and a short squeeze will start asap, so that the price can start rising like sky rocket. That is why it is wise to hedge and not compromise on risk management. Whether the market drop  further or suddenly jumps up  you need to be ready for both situation.

I don't much for this liquidation map except for those who are looking to enter and exit with a few days or weeks which will find this useful to enable them gauge short term market sentiment. In addition, I do not also see any serious increase in volatility and if I'm ask for my honest opinion, I would say that the market is more stable now than what we use to know. For instance, Bitcoin have been bouncing between $65k and $70k for a long time now, which signals that the market is being compressed to build up liquidity for bigger moves on either direction.

The volatility is pretty much normal if you take into consideration the past dumps. I think it's even more stabilized than before as shown on the price, just a few years ago the price could go down 30% and rise 20% within a night. It was partly becaucse we got ETF as well. You know what's more concerning? it's that we are in a red month streak of fifth time in a row.

Its is already know that, that is the nature of cryptocurrency, someone who have been investing in crypto should be well aware that cryptocurrencies is a volatile assets, and it goes up and down, and you can’t trust all the cryptocurrency, but I can at least try to trust the Bitcoin which is why Bitcoin is more sustainable because of the way Bitcoin is built but currently now all the cryptocurrency seems to be going down down, and that doesn’t make any absolutely sense to me, which is why everyone should be very careful with the crypto currency they decide to invest in because, I would say bitcoin is more valuable and appreciated for a long term purpose.

Even if Bitcoin is the most greatest asset to acquire still liquidation still unavoidable especially if lots of those people use to trade their bought Bitcoins. They can avoid getting stress with those situation if those people just decide to hold their bitcoin for many years. If they do that option there's really a good chance that they won't get bother and get lots of headache if there's similar crypto winter situation like this will happen in future. Then also they can take advantage on current price dipping situation since they might get have great chances to earn once market goes back and there's a major great recovery slowly happening.

Volatility is natural part of crypto world and we should not be shocked about seeing it going crazier in the recent months. Because we are in the bear market which means that it is not a stable price and we have seen it go up and down a lot, that's normal. What we need to realize however is that we are seeing it change a lot and for that reason we can't really make any big changes for it. I get that it may not be something you love a lot but that is going to be the case for any movement for bitcoin, bull or bear, we end up with high volatility. Right now, it is the bear season and price went from as high as 125k to as low as 60k and we have to see some volatility to see that, it can't be straight down line, which is why it's normal.

Liquidation maps is not a signal or trend indicator to focus on though because there are liquidation zones on either side of the price so you want to be mindful of that. Before Bitcoin dropped below 70K, there were stacks of shorts leading all the way to 90K but then the longs got slaughtered. I'm sure those who were long were hoping that there would be a squeeze. Probably the best approach to the volatility in crypto is just to have good understanding of the chart and only use tools like liquidation maps as an after-thought.

So if you're thinking it's moving too fast, then just try to change the timeframe. I know sentiment is good when analyzing the trend of market, but liquidation heatmap is also useful to spot crowd positioning in the market. It's good tool to help us in managing our expectation over the sentiment in the market.

You're right. Currently BTC is at 62/63k. Those hoping to catch the long to the liquidation hitmap were left hanging

Your advice makes a lot of sense, I have come to understand that most cryptocurrency are volatile in nature which is why if you have been investing in bitcoin and you know what Bitcoin is all about you will understand that most of the cryptocurrency depends on Bitcoin to thrive, which is why I will also advice anyone who wants to buy any cryptocurrency should consider buying Bitcoin because Bitcoin will guarantee you more chance of success in your investment plans, with the way Bitcoin is volatile you can be rest assured that Bitcoin would never disappoint and I don’t believe bitcoin will ever get to zero, instead Bitcoin can dip for some time and it will still come back to it’s usual ATH, now we are in a bear season, any moment from now we can also enter the bull season of Bitcoin, so volatility in bitcoin doesn’t matter anything.

Not many people realize this, unfortunately it's true that we are in a world where it is not going to be that easy for us to make this kind of money if we didn't had volatility, and volatility is crypto's reason why it got so many people interested. Sure when it goes down it's sad, but when it goes up it's the way to go because you do not get to see things double in price as quickly as bitcoin, and if you end up using futures? That high leverage could turn your few hundred dollars into hundreds of thousands of dollars in a week. That "possibility" is the reason why people are interested.

I know what you mean, it's like a wild ride out there. I've seen my share of ups and downs with trading, but this past week was something else. My VTC position got liquidated twice in one day [VTCUSD chart]. Still shaking my head about it.