Bitcoin is Trading at One-Month Low, Worst Week in Months
Bitcoin plummeted to a one-month low on Friday and was on track to suffer bloodiest week in six months as traders booked gains following a lengthy surge and were frightened by the prospect of creditors of defunct cryptocurrency exchange Mt Gox liquidating their payments. Bitcoin, the most valuable cryptocurrency by market capitalization, was down 1.6 percent to $55,980 at Asia’s mid-session, its lowest level since mid-October and 20% lower than the previous week’s historic highs.
“Selling pressure has been rather consistent,” said Matthew Dibb, chief operating officer of Singapore-based crypto asset management Stack Funds, adding that he anticipates it will continue until the coin finds support near $53,000.
Bitcoin has lost 14% this week, breaking through its 50-day moving average. It has increased by more over 90% this year. Dibb said that there was profit taking and fear about more selling after a Tokyo court’s approval of efforts to compensate creditors of Mt Gox, a crypto exchange that failed in 2014 after losing $0.50 billion in bitcoin.
“Those impacted will get a substantial amount of bitcoin, most probably in Q1 or Q2 of 2022. On a long haul view, this has instilled panic in the market. This is based on the assumption that those creditors are probable sellers,” he said.
Ether, the second biggest cryptocurrency by market capitalization, remained stable Friday at a three-week low of $4,014 but was on track for a 14% weekly loss. Both ether and bitcoin seem to have taken a hit as world markets have remained hesitant in recent times due to worries about growth in the economy, interest rates, and inflation.
“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.”