Bitcoin prices drop to their lowest in almost 6 weeks

[ad_1]

Bitcoin prices have fallen today, falling to their lowest since mid-October. (Photographic illustration by … [+] Chesnot / Getty Images)

Getty Images

Bitcoin prices suffered some weakness today, dropping to their lowest level since mid-October, with market watchers citing several factors as potential triggers for these declines.

The world’s largest digital currency depreciated to $ 55,460.96 today, according to data from CoinDesk.

At this point, the cryptocurrency was trading at its lowest since October 13, according to additional figures from CoinDesk.

In addition, it was down almost 20% from the all-time high of almost $ 69,000 it reached earlier this month.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Several bearish factors

In explaining the latest downward movement in digital currency, analysts pointed out that there are many variables that could fuel these losses.

“I don’t think there is a single catalyst driving Bitcoin prices down this week,” said John Iadeluca, founder and CEO of multi-strategy fund Banz Capital.

“There has been a movement of Bitcoin from extremely old wallets that has sparked rumors. In my opinion, however, the decline in Bitcoin prices this week is the culmination of increasing selling pressure, year-end profit taking, as well as speculation, ”he said.

When asked to clarify what he meant by ‘speculation’, Iadeluca pointed out that many market watchers are trying to figure out ‘what the movement of Bitcoin from old wallets means, and whether that indicates to significant Bitcoin sales made from these wallets in the near future. “

Concerns of Mount Gox

Several analysts have talked about the impact that the current situation of Mt. Gox could have had on the price of bitcoin.

Nobuaki Kobayashi, the administrator of Mt. Gox, recently announced that the proposed rehabilitation plan for the exchange, which was hacked in 2014, was “final and binding.”

As a result, creditors of the now defunct exchange will receive more than 140,000 units of bitcoin, worth more than $ 7 billion, according to pricing data from CoinDesk.

If these creditors sold their holdings, it would put downward pressure on the price of bitcoin, potentially fueling significant declines.

Andrew Rossow, an internet and tech lawyer, said these developments are already affecting digital currency.

“I am very convinced that due to the fact that the rehabilitation trustee begins to make (re) payments to creditors, this causes the Crypto Fear & Greed index to rise, causing market sentiment to drop in relation to the price of bitcoin market, ”he said.

“What this shows is that while the details of the Mt. Gox rehabilitation plan have been generally known to the public and investors for some time, the behavior of consumers and investors shows that the fear is still the determining factor in the price of Bitcoin, ”Rossow added.

“Fear is what pushes it down, but also fear pushes it higher – I believe the fear of Mount Gox is what brought the price down,” he said.

Iadeluca also claimed that the situation in Mt. Gox was weighing on investors.

“Yes, I think the situation at Mt. Gox has played a role in the downward pressure on Bitcoin prices recently,” he said.

“Whether the situation turns out to be catastrophic or not, it seems to be causing the market to FUD.”

Dylan LeClair, head of market research for Bitcoin Magazine, offered a more skeptical take on the matter.

“The headlines recently emerging from the Mt.Gox administrator dispute may have had a marginal impact on the market due to the headlines,” he said.

“Some creditors have said they don’t expect their claims to be resolved until 2023, and some of the claims have already been acquired by hedge funds,” LeClair added.

“The news from Mt.Gox is getting more headlines as the market is changing in our opinion.”

Dollar strength

LeClair claimed that the rising value of the U.S. dollar, relative to other fiat currencies, has contributed to recent bitcoin price losses.

“When you look at what’s going on in traditional markets with the DXY, which measures the value of a dollar against other fiat currencies, there has been continued strengthening throughout 2021, and that’s a potential catalyst for a movement of risk in all world markets, “he said.

The strength of the dollar “played a role, at least marginally”, in causing risk-free sales, which in turn helped drive down bitcoin prices, the analyst said.

“$ BTC is BTC / USD, and when the denominator strengthens against other foreign currencies, investors have to sell dollar-denominated assets to cover dollar-denominated liabilities,” LeClair noted.

Rossow also commented on this issue.

“The DXY price index definitely has an impact on the price of Bitcoin. The difficulty here, however, is identifying the exact factors driving growth and decline, making it difficult to identify a clear relationship between the DXY and the price of Bitcoin.

“If we deviate from past behavior, there appears to be a negative correlation between the price of Bitcoin and the DXY – meaning that as the price of the US dollar rises, the price of Bitcoin is most likely going to collapse. because it may not also be represented in traditional portfolios.

Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, EOS, and soil.

[ad_2]