Bitcoin (BTC) price has tested the $16,000 resistance multiple times since the 25% crash that occurred between Nov. 7 and Nov. 9, and some critics will justify their bearish bias by incorrectly assuming that the failure of FTX exchange should trigger a much broader correction.
It’s kind of annoying me that Bitcoin is still selling for $16k-ish, even in the wake of all of this FTX news. I mean I assume the volume is low, but what on earth will it take to properly crush this zombie “currency” back to its rightful value of nearly zero?
— Daniel Knowles (@dlknowles) November 18, 2022
For example, Daniel Knowles, a correspondent at The Economist, says the 26th largest tradable asset in the world with a $322 billion market capitalization is “astonishingly useless and wasteful.” Knowles also said that, “there is still no logical case for specifically Bitcoin. It’s pure ponzi.”
If you think it through, for outsiders, Bitcoin’s price is the single most important indicator of success, regardless of its valuation surpassing secular companies such as Nestle (NESN.SW), Bank of America (BAC) and Coca-Cola (KO).
Most people’s need for centralized authority of their money is so entrenched that cryptocurrency 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 synonyms for adoption.
It is worth highlighting that Bitcoin has been trying to break above $17,000 for the past seven days, so there is certainly a lack of appetite from buyers above that level. The most likely reason is that investors fear contagion risks, similar to what was seen with Genesis Block, the last FTX-related victim to halt service due to liquidity concerns. According to recent reports, the company announced plans to cease trading and shutter operations.
Bitcoin price is stuck in a downtrend, and it will be hard to shake it, but it’s a fallacy to assume that centralized cryptocurrency exchange failure is the primary reason for Bitcoin’s downtrend, or a reflection of its actual value.
Let’s look at crypto derivatives data to understand whether investors remain risk-averse to Bitcoin.
Futures markets are in backwardation and this is bearish
Fixed-month futures contracts usually trade at a slight premium to regular spot markets because sellers demand more money to withhold settlement for longer. Technically known as contango, this situation…
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