Bitcoin Price Collapse Caused By MtGox Fears, But Analysts Maintain Record Forecast Before 2022

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Bitcoin is down more than $ 10,000 from its all-time high earlier this month, and continues to drop steadily from its high above $ 68,000 without encountering significant resistance.

There does not appear to be a single cause for the price drop, with analysts citing several reasons for the drop.

One of the simpler explanations is that long-term investors skimp on 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 U.S. infrastructure bill, which could see companies subject to more stringent rules for holding cryptocurrencies.

Crypto market analyst Simon Peters, who works for online trading platform eToro, believes Taproot’s recently implemented upgrade to the Bitcoin blockchain could add to the sense of uncertainty, despite the update improving the speed, cost and security of BTC transactions.

“Perhaps the most significant upgrade in the past four years for the network, Taproot was aimed at streamlining crypto-asset transactions,” Mr. Peters said. “Upgrades of this nature can cause near-term uncertainty as investors hold back on fire to see what happens to the grid.”

Another thread of doubt for investors has been drawn from fears that creditors of the defunct Mt Gox exchange may finally liquidate their payments – seven years after the cryptocurrency collapse.

Administrator Nobuaki Kobayashi confirmed last week that 141,000 BTC ($ 8 billion) in custody would soon be distributed among those affected by the Mount Gox fiasco.

Data from blockchain market information company Glassnode suggests that more than three-quarters of the 18.8 million bitcoins in circulation are actually illiquid. This means that MtGox coins represent over 3% of the 4.2 million bitcoins in constant circulation. If all were cashed at the same time, the price would collapse, at least in the short term.

That these latest losses translate into a longer-term bear market has divided analysts, with some pointing to similar declines in 2013 and 2017 that came at the end of record market cycles.

Those positive about the direction of bitcoin believe that the continued spread of adoption that pushed the cryptocurrency more firmly into the mainstream in 2021 will prevent such price corrections from happening again.

Big companies like Tesla and MicroStrategy continue to devote their cash reserves to bitcoin, while several countries appear poised to join El Salvador by introducing bitcoin as legal tender. Some believe the bull run is far from over and are sticking to their prediction of a new all-time high to be reached before the end of 2021 or early 2022.

Currently trading at around $ 57,000, if any positive news could push bitcoin back above the $ 60,000 mark, it could potentially break the current downtrend, according to Marcus Sotiriou, a trader at the asset broker. UK-based digital GlobalBlock.

“If bitcoin can break above the $ 60,000 level, it would confirm a double-bottom pattern which is a bullish signal and could cause the short-term bitcoin uptrend to resume to new all-time highs,” Mr. Sotiriou.

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