A significant price correction in Bitcoin could be caused by the failure of crypto lenders like BlockFi and Genesis, as well as the restart of miner selling.
Why crypto world affected cryptocurrency exchange?
The biggest cryptocurrency in the world is once again under selling pressure and has dropped below $16,000 for the first time since 2020. The entire crypto world has been affected by the demise of the cryptocurrency exchange FTX.
The market’s demand for liquidity has risen dramatically since the FTX collapse, and cryptocurrency lenders are struggling to keep up. A second cryptocurrency lender, Genesis, is scrambling to raise $1 billion in cash to meet withdrawal demands at its end, while cryptocurrency lender BlockFi is already preparing for a potential bankruptcy. The problems worsen as cryptocurrency exchange Binance has declined to invest in Genesis due to a conflict of interest.
According to some market observers, the collapse of Genesis might trigger a massive slaughter in the cryptocurrency market. Peter Berezin, head of worldwide strategy at BCA Research Inc., wrote in a letter to investors:
The collapse of FTX “more closely mirrors Enron’s collapse than Lehman’s” No amount of technical jargon can hide the fact that a large portion of the cryptocurrency industry is “based on a rickety foundation of deception and greed.”
What about Berezin long- term goal for bitcoin?
Berezin has also reaffirmed his $5,000 long-term goal for Bitcoin. Thus, a further 66% price correction from the current levels of Bitcoin is possible.
Profitable Bitcoin Transactions Reach 3-Year Low.
According to on-chain statistics, address activity for Bitcoin has increased to a 6-month high amid selling pressure for Bitcoin below $16,000. The FTX collapse’s FUD has compelled investors to remove their coins from the exchange and place them in their custody.
Is lucrative transactions has decreased
Furthermore, increased selling pressure into BTC is pressuring traders to sell off their holdings. The number of lucrative transactions has decreased to its lowest level in three years, according to on-chain data provider Santiment. Added was:
“The $BTC drop below $15.8k has caused many traders to finally exit the sector or liquidate assets. #Bitcoin is seeing the lowest level of transactions made while in profit since Nov, 2019. Bounces typically occur when this metric is severely negative.”
The price collapse and rising energy prices, on the other hand, present significant difficulties for Bitcoin miners in continuing their operations. The miner selling has recently resumed, which could cause Bitcoin’s price to correct further as it falls below $16,000.