Bitcoin [BTC] drops by 4% after Blockstream announces Liquid sidechain on Bitcoin
Bitcoin [BTC] saw a sharp price drop today, erasing over 4% of its value in just a few hours as it saw a waterfall drop earlier today. However, this strangely coincided with the announcement of Liquid, a sidechain of the Bitcoin blockchain, by Blockstream.
The project has been in the works for quite some time, with Blockstream bringing on various companies and exchanges in order to offer “near instant Bitcoin transfers between exchanges”.
The exchanges that participated in the launch of the chain included the likes of Bitbank, Bitfinex, BitMEX, Bitso, BTSE, OKCoin, SIX Digital Exchange, Unocoin, and Xapo.
The launch of Liquid is said to enable interoperability across various blockchains while providing users with a fast and secure method to conduct transactions. It functions on its own digital asset known as Liquid Bitcoin [L-BTC]. It is supposedly backed by a two-way peg to real Bitcoin, and can be “redeemed at any time”.
Reportedly, the sidechain will allow for full settlement of value in two minutes. It also allows assets to be tokenized and issued on the sidechain, which opens up the possibility of tokenized fiat currencies, digital reward points and real-world assets such as gold and silver.
Moreover, Blockstream aims to implement their confidential transaction technology that aims to obfuscate the transaction amount and asset type. This will ensure privacy between parties that are transacting.
Due to its property as a sidechain, it can be utilized for interoperability between different blockchains. This can also be used to provide liquidity through a shared protocol.
The price of Bitcoin has been moving in between the $6500 and $6600 marks for the entire week before breaking through the resistance on 8th October. It was trading around the $6660 mark for a short time before it saw a drop down to the $6550 mark on October 10th.
Before the drop earlier today, it was trading at around the $6570 mark and was holding key resistances. However, the drop saw it go below the $6300 mark while trading after the drop.
The drop occurred around 3 hours after the announcement by Blockstream, leading many to believe that there were factors that went unnoticed by the common investor.
Market analyst, Iarius Germund stated:
“There was no technical indicator that predicted such a sharp drop in price. This, correlated with the high spike in volume, has led to a buzz in the analyst community regarding Blockstream’s announcement. The quick drop implies that a whale might have dumped their holdings.”
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