Bitcoin price drops below $20,000

Bitcoin has fallen below $20,000, below the level widely watched by crypto enthusiasts, as the cryptocurrency’s brutal selloff shows no signs of abating.

Bitcoin dropped as low as $1,8739.50 and stayed below $20,000 on Saturday, according to CoinDesk, losing 72% of its value from its November high. Concerns about the Federal Reserve’s actions to tame higher-than-expected inflation have sent both stocks and cryptocurrencies into a bear market. Big names in the industry, including Coinbase Global a company ,

The largest cryptocurrency exchange in the United States recently announced job cuts.

There is no definite significance of the $20,000 level, but the price drops below $19783, the previous high of 2017, according to Coinbase. Bitcoin bulls have always believed that the cryptocurrency has entered a new phase of development and acceptance in recent years, and that it will not fall below the level of 2017.

Yuya Hasegawa, market analyst at Japanese crypto exchange Bitbank Inc. He said that people will lose faith in the cryptocurrency market as a whole, but that seasoned crypto investors and those who believe in its long-term prospects will find an opportunity to buy at a discount.

Ether, another major cryptocurrency, fell below $1,000, briefly reaching $975.35 on Saturday, according to CoinDesk, its lowest level since January 2021.

Bitcoin’s drop from a record high of $67,802 in November has wiped out nearly $2 trillion in the broader market. The total market capitalization of Crypto, which peaked in November at nearly $3 trillion, reached nearly $840 billion on Saturday — its lowest level since January 2021, according to data provider CoinMarketCap.

Bitcoin traded around the $30,000 mark for most of May before dropping sharply again in June following a fresh inflation shock and concerns about higher US interest rates. Investors have dumped assets that are seen as risky, such as cryptocurrencies and technology stocks.

Retail investors have received margin calls, with about $260 million in guarantees pledged by nearly 80,000 retailers in the past 24 hours, according to data provider CoinGlass. That compared to $1 billion earlier this week.

A growing number of previously soared cryptocurrency companies are feeling the pain of what has been dubbed the “crypto winter.” Cryptocurrency bank Babel Finance told clients Friday that it was suspending redemptions and withdrawals from all products, citing “extraordinary liquidity pressures.” Celsius Network LLC, one of the largest cryptocurrency lenders, has not allowed users to withdraw funds for about a week, citing harsh market conditions.

Crypto-focused hedge fund Three Arrows Capital Ltd. The company’s founders hired legal and financial advisors to help find a solution for investors and lenders after experiencing huge losses from selling digital assets in the large-scale market, the company’s founders told the Wall Street Journal.

The increase in cryptocurrency valuations over the past two years has been fueled by significant investment from companies like Tesla a company

And the period of low interest rates during the pandemic encouraged individuals stuck in their homes to buy riskier assets in the hope of achieving greater returns.

The rate increases that the Federal Reserve is now enacting come at a time when explosions in some crypto projects have spread across the ecosystem. The so-called stablecoin TerraUSD broke its peg to the dollar last month after intense selling pressure, leaving it and its original sister Luna now virtually worthless. While its developers sought to defend the TerraUSD peg, they sold off bitcoin reserves, affecting its price and other assets.

Recently, cryptocurrency investors have become concerned about a derivative of crypto-ether being locked in until the Ethereum network moves to a less power-hungry model. The so-called Lido-staked ether was traded at a discount against the same ether recently.

“Crypto has enough problems. It doesn’t need the macro,” said Noel Acheson, head of market insights at crypto lender Genesis Global Trading, referring to rising interest rates and inflation concerns.

write to Eileen Yu at elaine.yu@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Leave a Comment