Bitcoin Undergoing Correction, But A Resurgence Is Certain

Bitcoin Undergoing Correction, but a Resurgence Is Certain

Summary

  • Coinbase’s slump may have contributed to Bitcoin’s losses.
  • Environmental and renewable energy concerns continue to hurt BTC.
  • Bitcoin’s standing as a competitive investment asset has not been compromised.

Bitcoin’s stay above the $60,000s was short-lived, and the crypto-asset was down today by about 4.21% compared to its price recorded seven days ago. It was also a further 14% lower than the historic high of $64,875 recorded less than a week ago.

At the time of writing, BTC was trading at $55,359. Bitcoin’s recent rise had been attributed to Coinbase’s listing on Nasdaq. At the time of going to press, COIN was going for $340, down from a peak of $429. BTC price seems to be correcting but could well find its way back to the $60,000s.

Mixed fortunes for BTC

As more investors seek alternative ways to gain from BTC without owning the asset, ETFs are providing a way out. Earle Loxton, the co-founder of South Africa’s Crypto Index Fund, EC10, last week revealed plans to establish the first BTC EFT in the country.

The purpose of the EFT will be to provide institutional investors in South Africa with an indirect means to gain Bitcoin exposure. A successful launch of a Bitcoin ETF will significantly help drive up the demand. The application is expected to be submitted by the Johannesburg Stock Exchange.

BTC mining has recently suffered a setback. The hash rate of several BTC mining pools has been affected crucially by the blackouts in Xinjiang, China, due to safety inspections. Xinjiang is the primary source of BTC hash rate globally.  The inspection comes after a recent accident caused by flooding at a coal mine in Xinjiang. Interruption of mining may reduce the number of new BTC being churned out and could, in theory, spur a price upsurge.

Cryptocurrency exchanges such as Bithumb and Upbit are working with the authorities by providing data that will be used in analyzing potential irregularities.

As part of its campaign to expand its user base, Coinbase Global Inc. recently made an official announcement that it will be rewarding new users with BTC. The company’s launch on Nasdaq helped Bitcoin to rise to historic highs last week, and the reward scheme will certainly bring in more users eager to own BTC.

Concerns over energy consumption and regulatory control

Environmental concerns of Bitcoin keep on arising. As per an article published by the New York Times, environmental experts have called for BTC to imitate ETH by changing to a Proof-of-Stake (PoS) system.

As the world’s largest digital currency, continued attacks on cryptocurrencies are always bad news for Bitcoin. In the most recent development, Turkey’s central bank has banned the use of digital currencies as payment options. The bank has cited the far-too-common security risks associated with digital currencies and their unregulated environment for the move.

As part of a strategy to deal with carbon emissions concerns, some companies are setting up infrastructure for mining “green-Bitcoin.” The co-founder and CEO of Gryphon Digital Mining company, Rob Chang, stated that the company’s strategy, in the long run, is to be the first integrated digital currency miner with a fully owned 100% supply in clean energy. The firm has raised around $14 million in the new funding round to establish a BTC mining company that will not leave a carbon footprint.

Sustained high energy consumption rates by Bitcoin mining rigs is a limiting factor in its growth prospects, considering that many institutions are environmentally conscious and wouldn’t want to compromise their carbon footprint. Therefore, BTC could potentially be losing millions of dollars in new investments due to its poor environmental record.

BTC/USD technical outlook

BTC/USD will find first support at $55,325. The second support will be established at $53,340. The Relative Strength Index (RSI) for BTC/USD is at 33, making a strong case for a bullish upturn. This could drive prices up to the first resistance level at $57,953, beyond which it could retest the $60,000s with the second resistance level at $60,766.

BTC/USD technical outlook
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