Importantly, although Taproot already received support from the mining community earlier this week, another 800 blocks were needed for the function to be activated effectively.
With this update, and After a week in which the price of Bitcoin approached $ 70,000 with a new all-time high, the market expected a new bull cycle.
What is Taproot?
Taproot is an update proposal for the Bitcoin network, with which the capacity of the same for the creation of scripts would be improved, aligning with the proposals of other networks such as Ethereum that have properties associated with the creation of smart contracts.
In addition, Taproot also brings the possibility of masking complex transactions in the Bitcoin Blockchain, which would provide the digital currency with greater privacy in the operations carried out, accompanied by a decrease in their size through the Schnorr Signature system. .
Taproot would become one of the most important changes to implement in the Bitcoin network since SegWit took place in 2017, only that unlike that event it would be a Soft Fork, a light update that will bring operational improvements to the protocol.
Under this modality, a new voting mechanism is also implemented to approve these types of changes, without the need for heated debates or endless disputes about the future of Bitcoin, which in the end led to alternate versions supported by those who felt similar to those changes. visions.
“I have never agreed with the suggestion that bitcoin is a hedge against inflation, but the narrative clearly holds,” says Craig Erlam, an analyst at Oanda, adding: “This could bode well in the short term. term, as inflation data could worsen before improving. ” “The cryptocurrency has risen around 4% after the publication of the US CPI and, like gold, has given very little “, Explain.
“The recent rise is due to younger investors using Bitcoin instead of gold as a hedge against inflation,” they note from Spreadex.
“It is revealing to see that the price reacts so spectacularly. It is not only a sign that the market is extremely averse to inflationary pressure, but that investors are firmly using bitcoin as a hedge against rising prices.” says Simon Peters, an expert analyst in crypto assets at eToro.
“It is also an indicator that institutional investors may be participating in ‘buying the news’, as this is the type of movement that we would normally associate with other markets that react strongly to economic news.”
“As central banks around the world battle inflation, the need to maintain anything that is impervious to its value-eroding effects is becoming apparent. Bitcoin is fundamentally structured as a deflationary asset with a set limit of currencies that can enter circulation. While debating the level of inflationary pressure facing the world economy, it appears that investors are voting with their feet and increasing their holdings of cryptocurrencies to protect themselves and their assets, “explains the expert.
Peters wonders “how far this price increase will go.” “From an investor’s point of view, the key is to understand the intrinsic arguments of investing in crypto assets. Anyone interested in the market should do their research rather than just buying based on price movements. “
“The medium and long-term trend cannot be more bullish,” says José María Rodríguez, an analyst at Bolsamanía. “In fact, it has never been threatened in the least. So yes, the $ 100,000 that we have been talking about since the beginning of the year is getting closer and closer. And the $ 100,000 is not a real resistance because in it doesn’t really have, “he continues.
“But sometimes it is true that certain round and psychological figures can act as momentary resistance“, he concludes.
Bitcoin must go down to gain momentum
The ups and downs in an asset is the most normal thing in the world, but when we talk about cryptocurrencies they take on another nuance. As indicated by the Twitter account, Crypto Ed, Bitcoin should go back to before going for $ 70,000 according to William Suberg in Cointelegraph.
“Bitcoin is still bullish, but has a downward stretch before resurfacing,” they claimed from Twitter. “The pullback is going a bit deeper than I expected yesterday. It looks like it will do 1 more leg down to complete that ABC,” he said alongside a forecast price trajectory chart.
Therefore, the correction is expected in the short term and marks the retention of old April highs, now as supports.