With traders and investors booking profits following a long rally and amid fears among them that their payments may be liquidated by the creditors of collapsed crypto exchange Mt Gox, the value of bitcoin dropped on Friday to a one-month low and analysts anticipate that it will fall further next week – its worst week in six months.
The value of bitcoin was down by 1.6 per cent at $55,980 by mid-session in Asia on Friday which was the lowest since the middle of October and was 20 per cent lower that the last week’s peak value. Bitcoin is the largest cryptocurrency in the world in terms of market value.
“Selling pressure has been quite constant,” said Matthew Dibb, chief operating officer at Singapore-based crypto asset manager Stack Funds. He expects that the slide will continue till the digital currency gets some support at value of about $53,000.
There was a 14 per cent fall in the value of bitcoin for the year and through its 50-day moving average. So far this year the digital currency has gained more than 90 per cent in value.
Investors and traders in bitcoin were concerned on Friday of an extended period of sell off because of a Tokyo court allowing the plans for repayment of the creditors of Mt Gox, a crypto currency exchange hat had collapsed in 2014 after it lost bitcoins that were valued at more than a billion dollars.
“Those affected will receive a large sum of bitcoin, likely happening in Q1 or Q2 of 2022. This has brought some fear into the market on a longer term horizon,” Dibb said, on the expectation that those creditors are likely sellers.
In contrast, the value of ether, which is the second largest cryptocurrency by market value, remained steady close to a three-week low at $4,014 on Friday but was down 14 per cent for the week.
Because of the overall mood in the global market being that of caution in recent days primarily due to concerns about economic growth, interest rates and inflation globally, it appeared that both ether and bitcoin had been impacted by these factors.
“Bitcoin’s long-term outlook remains bullish,” said OANDA analyst Edward Moya.
“But the waters over the next few months will be rough as institutional investors look to see if the Fed will be forced to raise rates sooner and trigger a broad-based selloff of risky assets that include bitcoin.”
(Adapted from USNews.com)