In the first half of November, Bitcoin (BTC) tested the $16,000 around resistance levels several times after a 25% crash. The FTX collapse was cited as the primary reason for the bearish turn, and many analysts also opined that this issue will be bringing in a more impactful correction within the crypto markets.
Meanwhile, few industry observers are of the opinion that Bitcoin -a digital asset that has gone through many market corrections since its initiation in 2009 and only bounced back stronger- is quite worthless, and a waste of resources like electricity. As Daniel Knowles -in affiliation with The Economist, blatantly puts it: “there is still no logical case for specifically Bitcoin. It's pure ponzi.”
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<source: coinmarketcap>
Now, why is this thought sounding reasonable to quite a few people? It’s because to most outsiders and non-crypto enthusiasts (and even some in the crypto industry), Bitcoin’s price is the only thing that implies its worth as an asset class. If you are knowledgeable regarding the crypto space, you’d know how absolutely ridiculous this notion is, especially since Bitcoin’s value already goes past several big-shot organizations like Coca-Cola (KO), Nestle (NESN.SW), and the Bank of America (BAC). But to those who are just too used to the presence of centralized authorities in their financial affairs, the successes and failures of individual cryptocurrency exchanges seems to be something that defines the fate of the crypto world at large.
What people currently losing hope of Bitcoin’s (and the broader crypto space’s) success need to understand is that BTC is a decentralized currency based upon a peer-to-peer network of nodes, and not reliant on any one or multiple crypto exchanges at all. Therefore the fall of one single cryptocurrency exchange could never be synonymous to the fall of a crypto.
Most people’s need for centralized authority over their money is so entrenched that crypto asset exchanges’ success and failure rate becomes the gatekeeper and success benchmark, when in fact, quite the opposite is true. Bitcoin was created as a peer-to-peer monetary transmission network, so exchanges are not synonymous with adoption.
What’s more, BTC has been trying to break above the $17,000 levels for around a week now, so there’s already a lot of traders harboring bullish sentiments who are putting in significant efforts to push BTC past the $17,000 resistance. However, it’s undeniable that investors do fear the threat of contagion- especially with several corporations who had ties with FTX falling victim to the FTX-related downturn and liquidity issues.
About a week into the second half of November 2022, Bitcoin is trading around the $16,100 mark, with the $16,000 levels acting as a firm support for now. Until investors take the contagion risks caused by FTX’s collapse out of the picture, BTC might not be seeing a solid recovery.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.