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Why DeFi Bulls Being Over 90% Net Long Is Dangerous a For Crypto

Tony Spilotro by Tony Spilotro
2 years ago
in Cryptocurrency news
Reading Time: 2 mins read
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The decentralized finance buzz has finally started to cool off, but dip buyers are already over 90% net long on DeFi futures on crypto exchange Binance.

This says the market is incredibly bullish on these assets, however, mob mentality often leads to irrational decisions based on emotions. It also could be extremely dangerous for the crypto market, which has been overly greedy for some time now.

DeFi Bulls Blinded By Green, Charge Forward Toward More Red

Check crypto Twitter or any cryptocurrency sub-Reddit, and there’s no avoiding talk of the current DeFi trend. Wealth is being generated overnight, and assets are rallying hundreds of a percent, one after another to no end.

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One such asset even unseated Bitcoin as the most expensive crypto asset on a per-dollar basis. The success story is just one of many, however.

It has even promoted some crypto insiders to speculate on completely worthless assets, knowingly, to try and turn a profit. Some get burned in the process.

Related Reading | Why Are Small Cap Altcoins Outperforming Bitcoin And Other Major Crypto Assets?

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Only recently have any of these assets corrected by a meaningful amount, but much of that was prompted by a greater crypto market pullback led by Bitcoin and Ethereum.

But as these assets crashed, dip-buyers on Binance futures have amassed a substantial long position, outweighing shorts nine to one. With bulls over 90% net long on DeFi, a disaster could be looming.

binance futures defi long crypto

How Being Overly Net Long Could Nuke Overzealos Crypto Dip Buyers

The cryptocurrency market Fear and Greed Index reaching extreme highs has the market revisiting discussion about contrarian trading. Top investors over centuries all advocated, as Buffett so eloquently put, being “fearful when others are greedy,” and vice versa.

Greed is blinding. When easy money is being made, there’s no time when investors are more exuberant and unaware of any reversal taking place.

At the peak of the crypto bubble, investors bought the dip, only to be crushed in losses. After the latest DeFi dip, could that be what’s next for crypto investors?

Related Reading | How Fear and Greed in the Crypto Market Can Lead To Incredible Profit

91% of traders net long on Binance futures is a sign that the market may be too bullish, and is presenting a more profitable contrarian trade for those who take the risk.

Trading itself is all about risk management, and risk to reward ratio. These crypto traders may learn the hard way that the risk is greater to the upside, and reward even more enticing on the other side of the trade.

Tags: BinancecryptoDeFifutures
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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