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Thursday, July 18, 2024

Bitcoin heads for worst week in months

Bitcoin fell to a one-month low on Friday and was headed for its worst week in six months as traders have booked profits from a long rally and been spooked by an expectation that creditors of the collapsed crypto exchange Mt Gox might liquidate their payments.

Bitcoin fell to a one-month low on Friday, six months as traders benefited from a long rally and were afraid of the expectation that creditors of the collapsed Mt. Gox crypto exchange could liquidate their payments.

The largest cryptocurrency by market value, bitcoin was down 1.6% at $55,980 by mid-session in Asia, its lowest since mid-October and 20% below last week’s record high.

What actually happened?

“Selling pressure has been quite constant,” said Matthew Dibb, chief operating officer at Singapore-based crypto asset manager Stack Funds, who expects it could continue until the token finds support at around $53,000.

Read more: US Bitcoin business: boom or bane?

For the week, bitcoin has fallen 14% and through its 50-day moving average. It has gained more than 90% this year.

Dibb said there was profit taking and concern about more selling in the wake of a Tokyo court signing off on plans to repay creditors of Mt Gox, a crypto exchange which collapsed in 2014 after losing half a billion dollars in bitcoin.

“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,” he said, on the expectation that those creditors are likely sellers.

Why crypto has tanked?

Ether, the second largest cryptocurrency by market value, was steady near a three-week low at $4,014 on Friday but set for a 14% weekly loss.

Read more: A Bitcoin resurgence: Value exceeds $50,000 for the first time in 3 months

Both ether and bitcoin also seem to have suffered as the mood in global markets has been cautious over recent days amid concerns about economic growth, 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.”

Reuters with additional input by GVS