Bitcoin surged past the $100,000 milestone on May 5, reaching an all-time high of $104,088 before sharply reversing course. By the next morning, the price had dropped to around $96,000 — a sudden correction of over 10% in just hours. The violent swing triggered approximately 210,000 long-position liquidations across crypto derivatives markets, drawing widespread attention from traders and investors.
Financial commentator Di Xiang, known for his popular Facebook page Capitalism Survival Notes, analyzed the dramatic move, attributing the rally to a dual engine of market sentiment and favorable positioning. However, he emphasized that such rapid gains are often unsustainable and warned that a pullback was not only likely but predictable using a simple technical tool: the deviation rate (BIAS).
The Dual Engine Behind Bitcoin’s Surge
Di Xiang explained that the recent breakout wasn’t driven purely by fundamentals but by a confluence of bullish catalysts and strategic accumulation.
👉 Discover how market momentum shapes crypto rallies – stay ahead of the next surge.
First, former U.S. President Donald Trump announced plans to nominate Paul Atkins — a known pro-crypto figure — to lead the Securities and Exchange Commission (SEC). This news boosted investor confidence in a more favorable regulatory environment ahead of the 2025 U.S. election cycle.
Second, MicroStrategy, a long-time Bitcoin advocate, has been aggressively issuing stock over the past few months to raise capital for further BTC purchases. Their consistent buying adds structural demand and signals strong institutional conviction.
“These factors created a spiral effect,” Di said. “Positive news fuels buying, which drives prices higher, attracting more leverage and media attention — reinforcing the uptrend.”
This self-reinforcing cycle is common in speculative markets, especially when liquidity is abundant and sentiment turns euphoric.
Why All Rallies Eventually Pull Back
Despite the optimism, Di Xiang stressed a core principle of market dynamics: no asset rises indefinitely.
“Markets aren’t charities. Big players aren’t here to give money away — they’re here to make it,” he noted. “Once they’ve accumulated positions and the public is fully engaged, they’ll look for opportunities to distribute their holdings at premium prices.”
When retail participation surges and leverage spikes — as seen with the 210,000 liquidations — it often marks the peak of a short-term cycle. High leverage magnifies both gains and losses, making the market vulnerable to cascading sell-offs once price momentum stalls.
So how can investors anticipate these turning points?
The Deviation Rate: A Simple Signal for Timing Exits
Di Xiang advocates monitoring the deviation rate (BIAS) — a technical indicator measuring the distance between the current price and its moving average, expressed as a percentage.
“When BIAS expands rapidly, it signals that price has moved too far, too fast,” he explained. “Historically, extreme readings are followed by convergence — either through a sharp price correction or prolonged sideways consolidation.”
He outlined two types of convergence:
- Price retracement: A rapid decline back toward the moving average.
- Consolidation: Price moves sideways while the moving average catches up.
“I wouldn’t bet on avoiding a pullback,” Di cautioned. “It’s riskier to assume ‘this time is different.’ My rule is simple: when BIAS becomes excessively stretched, reduce exposure. Re-enter only after signs of stabilization and convergence.”
This strategy helps preserve capital during volatile phases and positions investors to buy back at better valuations.
Long-Term Holding vs. Short-Term Trading
While Di adopts a disciplined approach to short-term trading using BIAS, he maintains a long-term bullish stance on Bitcoin.
“I’ve held Bitcoin for three years and plan to continue,” he said. “My core position is small but permanent.”
He highlighted that cryptocurrencies offer extraordinary long-term returns, citing historical drawdowns like the 2022 FTX collapse as ideal buying opportunities for patient investors.
“Every crisis creates wealth redistribution,” Di observed. “Those who follow strict risk management — controlling leverage and position size — don’t fear crashes. They prepare for them.”
In fact, he argued that keeping large amounts on centralized exchanges poses greater risk than holding through volatility.
Bitcoin’s Bubble Risk and Systemic Resilience
Di acknowledged that parts of Bitcoin’s recent price surge may be fueled by speculative excess — essentially forming a bubble.
“These leveraged moves plant the seeds of a future crypto crash,” he admitted. “But crashes are inevitable in any high-growth market, just like stock market corrections.”
The key isn’t avoiding bubbles altogether — which is impossible — but surviving them. That requires:
- Clear entry and exit rules
- Strict leverage control
- Emotional discipline
👉 Learn how disciplined trading strategies can protect your portfolio during market swings.
Over time, Di believes these cycles strengthen the ecosystem. Weak hands exit, while committed holders accumulate at lower prices, setting the stage for the next leg up.
FAQ: Frequently Asked Questions
Q: What is the deviation rate (BIAS), and how do I calculate it?
A: BIAS measures the percentage difference between the current price and a moving average (e.g., 10-day or 20-day). For example: BIAS = (Current Price - MA) / MA * 100%. Traders watch for extreme values (e.g., +10% or -10%) as potential reversal signals.
Q: How can I avoid being liquidated during sudden drops?
A: Reduce leverage, set stop-loss orders, avoid overexposure to any single asset, and monitor funding rates and open interest for signs of overheating.
Q: Is Bitcoin still a good long-term investment after such a big run-up?
A: Many experts believe so. Despite volatility, Bitcoin’s fixed supply, growing adoption, and macro hedge characteristics support its long-term value proposition.
Q: What role does institutional buying play in Bitcoin’s price?
A: Institutions like MicroStrategy provide sustained demand. Their large-scale purchases can absorb selling pressure and signal confidence to retail investors.
Q: Are market corrections healthy for crypto?
A: Yes. Pullbacks eliminate excess speculation, reset sentiment, and allow new buyers to enter — contributing to healthier long-term growth.
Q: Should I sell all my Bitcoin after a 10% drop?
A: Not necessarily. Short-term traders might take profits or hedge exposure, but long-term holders often view dips as accumulation opportunities — especially if fundamentals remain strong.
Core Keywords
Bitcoin crash, Bitcoin price prediction 2025, cryptocurrency volatility, crypto liquidation, deviation rate (BIAS), leverage risk in crypto, long-term Bitcoin holding
👉 Stay informed and trade smarter — access real-time data and tools for your crypto journey.
Market cycles will continue — driven by emotion, leverage, and narrative. But with the right indicators and discipline, investors can navigate both booms and busts with confidence. Whether you're trading short-term momentum or building long-term wealth, understanding when to hold and when to step back is the true edge in the world of digital assets.