Bitcoin is down more than $10,000 from its all-time high earlier this month, with the price continuing to slide above $68,000 without meeting any significant resistance.
There does not appear to be a single reason for the fall in prices, with analysts citing multiple reasons for the slowdown.
One of the simplest explanations is that long-term investors are losing profits from their holdings, which usually happens after bitcoin hits an all-time high.
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There is also investor uncertainty over the US infrastructure bill, which could see companies subject to tighter regulations for holding cryptocurrencies.
Crypto market analyst Simon Peters, who works for online trading platform eToro, believes that the recently implemented Taproot upgrade to the bitcoin blockchain continues to improve BTC transaction speed, cost and security, despite the uncertainty surrounding it. feelings may increase.
“Perhaps the most significant upgrade over the past four years for the network, Taproot aimed to streamline cryptocurrency transactions,” said Mr. Peters. “Upgrades of this nature could lead to short-term uncertainty as investors come under fire to see what will happen to the network.”
Another thread of doubt for investors has been drawn by fears that creditors of the defunct Mt Gox exchange may finally liquidate their payments – seven years after the cryptocurrency exchange collapsed.
Trustee Nobuki Kobayashi confirmed last week that 141,000 BTC ($8 billion) in custody will soon be distributed among those affected by the Mount Gox fiasco.
Data from blockchain market intelligence firm Glassnode shows that more than three quarters of the 18.8 million bitcoins in circulation are in fact illiquid. This means that MtGox coins represent more than 3 percent of the 4.2 million bitcoins in continuous circulation. If all of them are redeemed at once, it will lead to a fall in the price, at least in the short term.
Whether these latest losses translate into a longer-term bear market has analysts divided, with some pointing to similar declines in 2013 and 2017 that came at the end of record-breaking market cycles.
Those positive about bitcoin’s direction believe that the continued spread of adoption that will push the cryptocurrency more strongly into the mainstream in 2021 will prevent such a serious price correction from happening again.
Major corporations such as Tesla and Microstrategy continue to hold cash reserves in bitcoin, while several countries are set to join El Salvador by offering bitcoin as legal tender. Some believe the bull run is not over and stick to its prediction to reach a new record high before the end of 2021 or early 2022.
Currently trading at around $57,000, according to sales trader Marcus Sotirio of UK-based digital asset broker GlobalBlocks, if a piece of positive news can push bitcoin above the $60,000 mark, it could potentially trigger an ongoing downtrend. can break.
“If bitcoin can break above the $60,000 level, it would confirm a double bottom pattern which is a bullish signal and could result in bitcoin resuming its uptrend to new all-time highs in the near term. ,” said Mr. Sotirio.
Credit: www.independent.co.uk /