The Taproot Upgrade Didn’t Cause a Rise in Bitcoin, But a Drop. Why?

Bitcoin (BTC) Will Rise, But the Price of $100K Before the End of the Year Is in Doubt

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After an important upgrade in the bitcoin network, the price of the first cryptocurrency dipped by more than 8% and did not go up, as the crypto community expected.

The sharp collapse of BTC led to a decline in all leading altcoins. As a result, market capitalization fell by almost 10%, below $2.6 trillion. Perhaps this is the best time to buy the lows of cryptocurrencies.

The data of the analytical company Glassnode confirms that just before the update, traders diversified their portfolios and shifted to altcoins. However, now the situation resembles the standard “buy the rumor, sell the fact” scheme.

The sell-off of BTC after the launch of Taproot drove the price down to a strong support level of $60K. However, the consolidated opinion of traders is that we can expect a rise to $80K by the end of the year. The forecast takes into account the upward movement in the channel, which was initiated at the end of June.

The Taproot upgrade is important to bitcoin’s functionality. After it, a decrease in fees on the network and the possibility of launching smart contracts are expected. However, this does not actually make bitcoin a player in such important areas of the cryptocurrency industry as DeFi or NFT. Bitcoin is the oldest cryptocurrency with the oldest blockchain. Now the projects have already been created that have much more advanced functionality. In addition, Taproot’s impact was already included in the BTC price. The upgrade was announced back in 2018.

The negative background for bitcoin is created by the news that the SEC sent a subpoena to the mining company Marathon Digital. The company cooperates with the investigation but does not disclose the details of the claim. It is suspected of violating the Federal Securities Law. The news affected the stock prices of other mining firms such as Riot Blockchain, Bitfarms, Bit Digital and Hut 8. Their shares plummeted from 2% to 6%.

The optimism of market participants is based on the continued fund’s inflow into cryptocurrencies. The weekly report of the investment company CoinShares notes that last week cryptocurrency projects raised $151 million, of which $98 million came to bitcoin, this is 3% more than a week earlier. The total amount of assets under management (AuM) focused on BTC reached $56 billion for the first time, according to CoinShares. Meanwhile, investments in new alternative cryptocurrencies are decreasing. It is stated in the report:

– Although flows have been positive recently, we have witnessed subdued volumes.

As for altcoins, Cardano (ADA) is of the greatest interest to institutional investors. ADA-focused funds raised $16 million in a week.