"Bitcoin Reaches 105K: A Trap? Warning Signs from Leverage, Musk, Custodians and More"

# Bitcoin Rebounds to $105K, but Market Risks Persist Bitcoin (BTC) saw a brief recovery, hitting the $105,000 mark intraday; however, concerns persist about whether this is just a "dead cat bounce" indicating potential further declines. On November 6 (local time), Cointelegraph reported that Bitcoin had dipped to $103,000 before rebounding. Despite this, risks remain from 1) excessive leverage, 2) mounting tensions between Donald Trump and Elon Musk, and 3) opaque custody practices. The cryptocurrency momentarily hit $105,000 in the New York market, but the market has not fully recovered from the previous day's sharp drop. Investors are questioning whether this latest plunge signifies a corrective move or hints at deeper structural issues. # Excessive Leverage and the "Bull Trap" Analysts point to excessive leveraged betting as a key factor in Bitcoin's sharp price decline. Crypto analyst SuperBitcoinBro remarked, “The drastic price drop was driven by investors leveraging excessively.” notably, James Wynn, a high-leverage investor linked to HyperLiquid, reportedly suffered losses exceeding $100 million during the market turbulence. SuperBitcoinBro elaborated, “Overconfidence among investors, coupled with excessive leverage, often leads to bull traps. This recent plunge seems to fit that category.” This phenomenon occurs when a sudden price drop entices investors to buy in, only to see the price fall further, amplifying the downward momentum. # Musk-Trump Tensions Heighten Market Unease Ongoing conflict between former President Donald Trump and Tesla CEO Elon Musk has exacerbated market uncertainty. The two tech giants engaged in a heated exchange on social media, fueling volatility. While some market analysts believe Trump's pro-cryptocurrency policies may face delays due to the spat, others argue that linking their dispute directly to Bitcoin's decline may be speculative. Nonetheless, concerns linger over the diminishing influence of Musk-endorsed policy figures like David Sacks, a notable technologist who joined the White House following Musk's recommendation. There is speculation these policy leaders could encounter obstacles in advancing crucial strategies, such as state-level Bitcoin accumulation. The *New York Times* suggested that Sacks, informally known as the "crypto czar" within the White House, may step in to mitigate the fallout from Musk's absence. Many are keen to see what kind of reconciliation Trump and tech industry leaders might pursue to stabilize the situation. # Bitcoin Custody Practices Under Scrutiny Bitcoin custody practices have also become a contentious issue. Michael Saylor, head of the Bitcoin-focused entity MicroStrategy, faced criticism for not disclosing on-chain Bitcoin wallet addresses, citing hacking risks. Nevertheless, some investors suspect deeper issues, criticizing a lack of transparency in custody operations. Concerns include allegations that custodians are using Bitcoin as collateral for repeated borrowing, a practice called "rehypothecation." This lack of transparency has heightened fears that sudden price swings tied to poorly managed custody arrangements could trigger cascading market failures. While major cryptocurrency custodians like Coinbase Custody and Fidelity Digital Assets undergo regular audits and show no evidence of illicit activity, analysts emphasize the need for enhanced measures to stabilize investor confidence. Areas requiring significant regulatory improvement include allowing banks to custody digital assets, permitting physical redemptions of Bitcoin ETFs, and resolving staking-related uncertainties. Bitcoin's rise to $105,000 offers a temporary relief, but the crypto market remains fraught with vulnerabilities, with leverage, geopolitical tensions, and custody practices forming a complex web of challenges that are yet to be fully resolved.