Today, Bitcoin hit a one-month low and appears to be heading for its worst week in half a year. The extended rally drove profit. Now, traders are concerned that creditors of Mt Gox, the collapsed crypto exchange, might liquidate their payments.
The largest cryptocurrency by market value lost 1.6% during Asian hours, dropping to $55,980, 20% below its record high and its lowest since mid-October.
Matthew Dibb, COO at Singapore-based crypto asset manager Stack Funds, expects bitcoin to keep dropping until it finds support at around $53,000. According to him, there has been profit taking and fears over more Bitcoin selling after a Tokyo court approved plans to repay creditors of Mt Gox, which lost half a billion in bitcoin before collapsing in 2014.
He told Reuters in an interview:
Selling pressure has been quite constant. 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.
This week, bitcoin has lost 14% of its value. Still, its gains this year amount to 90%. Ether also lost 14% this week. Both bitcoin and ether are declining as global markets adopt a cautious approach amid concerns about inflation, interest rates, and economic growth.
OANDA analyst Edward Moya told Reuters:
Bitcoin’s long-term outlook remains bullish. 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.
Infrastructure law provokes price swings
On Monday, US President Joe Biden signed the $1.2 trillion infrastructure bill into law, whose clauses affect crypto investments. The Biden administration also proposed new laws to regulate stablecoins.
Jelena McWilliams, the chairwoman of the Federal Deposit Insurance Corporation (FDIC), told Reuters US officials were looking for ways to provide ‘guidance’ to banks in terms of clients’ crypto holdings. She said:
If we don’t bring this activity inside the banks, it is going to develop outside of the banks. … The federal regulators won’t be able to regulate it.
According to the legislation proposed by the Biden administration, stablecoin issuers would be subject to the same statutory provisions as banks. The first Bitcoin ETF officially launched last month, marking the debut of crypto on the New York Stock Exchange.
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