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Bitcoin trader reveals exit strategy: ‘Retail will provide our exit liquidity’

Bitcoin trader reveals exit strategy: ‘Retail will provide our exit liquidity’

Since Bitcoin (BTC) reached new all-time highs earlier this year, traders have wondered how far BTC can go. In this context, a Bitcoin trader revealed his exit strategy for the leading cryptocurrency, which involves selling to retail investors.

The trader’s account goes by the alias Wolf (@IamCryptoWolf) on X and has recently shown skepticism over Bitcoin price predictions. In particular, Wolf has criticized PlanB‘s $500,000 per BTC forecast, which has been massively reproduced by influencers.

According to the trader, retail investors will “FOMO” into Bitcoin as the price surpasses $130,000, following higher expectations ($500,000). Notably, this is when Wolf says he will start selling, using retail traders as exit liquidity to book profits.

He deemed the $500,000 price target based on a “broken model,” referring to the “Stock to Flow model.” Interestingly, this model has failed multiple times in Bitcoin history, misleading traders to unreachable targets every cycle. For example, PlanB had predicted BTC to reach $200,000 and then $100,000 in 2021 following his model, which never happened.

Retail Bitcoin traders are the exit liquidity in the ‘Greater Fool’ game

As of this writing, Wolf‘s post had more than 460 likes and over 33,000 views, likely reaching what the market understands for retail traders. This raises the question of whether other Bitcoin whales could make this trader’s target their own exit strategy, following a similar logic.

Curiously, the Greater Fool theory suggests that an asset’s price can rise if there are enough “fools” to buy it. These buyers believe they can sell the asset later at a higher price to a “greater fool.”

The theory perfectly illustrates the dynamics at play in the context of the Bitcoin trader’s exit strategy. Wolf bought BTC at lower prices, planning to sell the cryptocurrency to retail investors when the price surpasses $130,000. These retail investors, relying on the “broken” Stock to Flow model predicting $500,000 BTC, would become the “greater fools.”

Nevertheless, speculators playing this game always risk being the “greater fools” themselves.

They provide the exit liquidity for early Bitcoin traders to book profits, believing they can sell even higher later. The theory highlights the importance of understanding market dynamics and the risks of following third-party price predictions. Ultimately, the Greater Fool theory serves as a cautionary tale for retail investors not to become the last ones holding the bag.

Bitcoin (BTC) price analysis

Meanwhile, Bitcoin trades at $67,770 by press time, within a three-month price range between $60,000 and $72,000.

A bull rally to $130,000 would mean 100% gains from current prices. This represents a huge surge, considering that BTC has made around 50% gains year-to-date from $42,284 registered in January.

BTC/USD daily price chart. Source: TradingView / Finbold

Bitcoin traders building their exit strategies must consider the possibility that their bullish expectations could be part of somebody else’s exit strategy and act accordingly with proper risk management and caution.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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