For the first time since December 2020, Bitcoin fell below $20,000 as investors continued to flee from risky assets.
Earlier this afternoon, Bitcoin fell 6% to around $19,300 a coin. The world’s largest cryptocurrency by market capitalization has fallen for 12 consecutive days. Ethereum also dropped below $1,000 at one point, the lowest level since January 2021.
“Recession fears are growing, causing investors to flee risk assets. It also makes crypto traders wary of bottom-fishing, even though Bitcoin has dropped to lows,” Edwards said. Moya, senior market analyst at Oanda, commented.
The US Federal Reserve (Fed) this week raised interest rates by 0.75% – the largest increase since 1994. Other central banks also signaled that they will continue to raise interest rates this year to curb inflation control. The high interest rate environment, according to analysts, is a negative signal for risky assets like cryptocurrencies. This contributed to Bitcoin’s 70% drop from its November all-time high.
The market has been on a downward slide since late last year due to concerns about possible monetary tightening by the Fed, followed by the collapse of the Terra network last month and the recent meltdown of crypto lender Celsius. Network. Pressure on the market continued to mount as Three Arrows Capital said it had suffered major losses and was considering selling assets or seeking a bailout. According to research firm Glassnode, even long-term crypto holders are under pressure.
Mike McGlone, analyst at Bloomberg Intelligence, argues that even with the market plunging, historical data suggests that Bitcoin could find critical support around $20,000. Previous sell-offs prove this price level is likely to recover.
Bitcoin could “build support in the $20,000 range like the way the market held the $5,000 mark in 2018-2019 and the $300 region in 2014-2015,” commented Mike.
The size of the crypto market has shrunk significantly from its late-2021 peak, when Bitcoin was trading near $69,000 and traders poured money into speculative investments. Follow CoinGeckothe total market capitalization of cryptocurrencies is now only around $900 billion, down from $3 trillion in November of last year.
“The sentiment in the crypto market shows that the unknown is the most important issue at the moment,” commented Ainsley To, Noelle Acheson and Konrad Laesser of Genesis Trading, “The rise of counterparty risk is a reminder that not every key element in risk management can be precisely quantified. Risk is what’s left after you think you’ve got everything under control.”
Minh Son (according to Bloomberg)