Bitcoin slips below $20,000 to lowest since December 2020

The neon logo of the cryptocurrency Bitcoin is shown at the Crypstation Café, in downtown Buenos Aires, Argentina, May 5, 2022. The photo was taken on May 5, 2022. REUTERS/Agustin Marcarian

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June 18 (Reuters) – Bitcoin fell below $20,000 on Saturday to its weakest in 18 months, extending a slide on investor concerns about growing problems in the industry and a general pullback in riskier assets.

The crypto sector has been pumped this week after crypto lender Celsius froze withdrawals and transfers between accounts, crypto firms began laying off employees, and there were reports that a crypto hedge fund was in trouble. Read more

This coincided with the decline in stocks, as US stocks suffered their largest weekly percentage decline in two years on fears of higher interest rates and the growing possibility of a recession. Read more

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Bitcoin, the largest cryptocurrency, is down 7.79% at $18,848, after earlier touching $18,732, its lowest since December 2020.

It is down about 59% this year, while ether, backed by Ethereum’s rival cryptocurrency, is down 74%. In 2021, Bitcoin peaked at over $68,000.

“The break of $20,000 shows you that confidence has collapsed in the crypto industry and that you see the recent pressures,” Edward Moya, chief market analyst at The Americas OANDA, said Saturday.

“Even the loudest crypto-fans from the big rally are now silent. They are still bullish on the long-term but they are not saying this is the time to buy the dip,” Moya said.

The sector also suffered losses after companies such as Coinbase Global Inc (COIN.O), Gemini and Blockfi said they would lay off thousands of employees as investors dump risky assets.

The slippage is affecting retail investors who have bought the assets.

“There are a huge number of people who are going to be left behind forever,” Moya said, referring to the retail buyer. “But there are still a lot of people who were about to go into space and there is still interest. It’s only last year that interest has increased and most people are starting small.”

Jeffrey Gundlach, CEO of DoubleLine Capital, said Wednesday that he wouldn’t be surprised if the price of bitcoin dropped to $10,000.

Others say the deep slide could force more investors to dump bitcoin, which has surged along with other risky assets during the pandemic stimulus era.

“The $20,000 level for bitcoin is an important technical level and a drop below that could lead to more margin calls leading to forced liquidation,” said Jay Hatfield, chief investment officer at Infrastructure Capital Management in New York.

“Bitcoin may drop below $10,000 this year as the Fed liquidity bubble fully bursts as bitcoin returns to pre-pandemic levels.”

At Saturday’s lows, bitcoin was at risk of closing below key levels set by technical analysis, which could reinforce bearish sentiment.

One of those levels was $19.225, the 76.4% Fib retracement level of its rally during the pandemic. The other was $19,666, the highest level in the previous bitcoin rally that peaked in 2017.

Bitcoin price drops below $20,000
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Additional reporting by Janavi Nidomulu in Bengaluru; Megan Davis and Burton Frisson of New York; Michael Price of Washington; Editing by Andrew Heavens

Our Standards: Thomson Reuters Trust Principles.

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