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Tuesday, December 7, 2021
Trading

Bitcoin trades in tight range as bullish sentiment cools

Bitcoin trades

The bitcoin Fear & Greed Index is starting to decline from its highest level in over seven months, which suggests buyers are starting to take some profits

Bitcoin traded in a tight range on Tuesday as extreme bullish sentiment appears to be cooling. The cryptocurrency was trading at around $62,000 at one time and is roughly flat over the past 24 hours.

The bitcoin Fear & Greed Index is starting to decline from its highest level in over seven months, which suggests buyers are starting to take some profits after a nearly 45% rise in BTC’s price over the past month.

The last time the Bitcoin network locked in a major upgrade, in July 2017, the bitcoin cryptocurrency’s price climbed nearly 50% through Aug. 23, when the changes went live.

Now, as the original blockchain network prepares for its next big upgrade in November, known as Taproot, few investors are expecting a price reaction anywhere near that scale. BTC’s price has already doubled this year and hit a new all-time high near $67,000 last week. While further gains are possible, Taproot alone likely won’t be the catalyst.

The Taproot upgrade will have minimal impact on bitcoin’s price, said Edward Moya, senior market analyst for the online foreign-exchange broker Oanda.

Set to go into effect on Nov. 16, the Taproot upgrade is designed to increase privacy protections on some transactions over the network through an innovation known as “Schnorr signatures.” The upgrade also will allow for more lightweight “smart contracts” – which are programs stored on a blockchain that run when certain conditions are met. Smart contracts have been a key feature of the rival Ethereum network, powering fast growth in decentralized finance (DeFi) applications that aim to automate many functions of banks and trading firms.

This is a revolutionary moment for Bitcoin, said Don Guo, CEO of Broctagon Fintech Group.

Yet, the episode is serving to highlight a key difference in Bitcoin’s approach to network improvements versus competing blockchains where upgrades and tweaks are far more common. Ethereum, the next big blockchain, is now pushing forward with its Ethereum 2.0 overhaul expected next year, has seen the price of ether, its native cryptocurrency, quintuple this year.

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