Bitcoin plummeted to a one-month low on Friday, putting it on track for its worst week in six months, as traders booked profits following a protracted rise and were frightened by the prospect of creditors of the defunct crypto exchange Mt Gox liquidating 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.
“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.
Bitcoin has lost 14% this week and has broken through its 50-day moving average. This year, it has increased by more than 90%.
Following a Tokyo court’s approval of measures to repay creditors of Mt Gox, a crypto exchange that failed in 2014 after losing half a billion dollars in bitcoin, Dibb said there was profit grabbing and fear about more selling.
“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.
On Friday, Ether, the second most valuable cryptocurrency by market capitalization, remained steady near a three-week low of $4,014 but was on track for a 14 percent weekly loss.
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. [MKTS/GLOB]
“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.”
