The crypto market has cooled off over the last week, with only a few altcoins escaping the downturn as Bitcoin dropped below $60K.
Several recent developments could be responsible for the slump. Collapsed crypto exchange Mt. Gox released news of an $8 billion payout, President Joe Biden signed the infrastructure bill containing a controversial crypto tax requirement, and Hillary Clinton warned that Bitcoin could undermine the dollar — just before El Salvador announced plans to build an entire new city powered by Bitcoin mining.
Meanwhile, Ethereum fell 8% and most altcoins made larger losses. Metaverse tokens MANA and Enjin were among the few to defy the downtrend with 8% and 10% gains respectively, along with Zcash which popped 20% on news of a transition to Proof of Stake.
This Week’s Highlights
- Zcash pops 20% on Proof of Stake news
- Fears of Mt. Gox repayment loom over market
Zcash pops 20% on Proof of Stake news
Zcash is among this week’s biggest movers, jumping almost 20% on Friday to finish the week with over 10% gains.
The sudden swing higher was sparked by the release of a new roadmap, which details plans for a transition to Proof of Stake and a new wallet designed to put Zcash at the center of decentralized finance (DeFi).
In the long-term, moving away from Proof of Work is expected to reduce selling pressure. Poor performance of the price has often been blamed on miners liquidating their Zcash earnings to pay for energy bills.
Fears of Mt. Gox repayment loom over market
The collapse of the Mt. Gox exchange in 2014 cast a long shadow over the crypto market, and sentiments darkened once again this week on news that repayments could lead to the distribution of more than $8.5 billion in Bitcoin.
Although it is not yet clear if the payouts will be in crypto or fiat currency, falling prices may reflect concerns that the distribution will create a disturbance in the crypto market.
Nevertheless, the exact time frame of the payouts is not yet known, and they are likely to take place in a phased manner to avoid making a sudden impact.
As the crypto markets have cooled off, the Bitcoin Fear & Greed Index has now fallen back to Neutral from Extreme Greed.
However, the markets could heat up again as Americans tuck into their turkey dinners on Thursday. Thanksgiving has been known to trigger wild price swings in the crypto market, with Bitcoin either delivering the gift of rising prices as in 2017, or a sudden drop like we saw the following year.
Prices could also react to regulatory developments this week, as President Biden is expected to choose the next chair of the Federal Reserve.
Written by a team of experienced financial analysts at eToro.
This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results