On Coinbase, the leading cryptocurrency fell below $20,000 for the first time since December 2020, trading as low as $19,052. According to CoinGecko statistics, it has registered a small rebound to $19,272 since.
The inability of Bitcoin to maintain a price over $20,000 is notable since $20,000 has traditionally been a key support level. Bitcoin remained over $20,000 for the whole 2021 bull run, reaching a high of $69,000 in November 2021. It is presently nearly 70% lower than its all-time high.
Bitcoin has always maintained a position above its prior bull cycle’s peak throughout downtrends. For instance, it surpassed $1,000 in 2013 and traded at four digits during the whole bull run and ensuing winter of 2017. In December 2017, it reached an all-time high of around $19,600. Following today’s market movement, Bitcoin has broken a significant trend by dropping below its previous cycle’s peak.
Ethereum, the second-largest cryptocurrency, has also underperformed on the market recently. Early Saturday morning, Ethereum went below $1,000, another significant psychological trading threshold, as Bitcoin plummeted to $995. It is projected to end its eleventh straight week in the red.
Several factors have contributed to the bitcoin market’s diminishing momentum. This week, Celsius froze client withdrawals while it dealt with bankruptcy difficulties, and then Three Arrows Capital, one of the industry’s most prestigious hedge funds, had a liquidity crisis. The hedge fund co-managed by Su Zhu and Kyle Davies, which once managed over $10 billion in assets, is said to be on the verge of collapse owing to a series of margin calls resulting from trading with high leverage during the market slump. Babel Finance, a marketplace for institutional lending, restricted withdrawals owing to insufficient liquidity.
The most recent decline occurred against the background of a precarious macroeconomic situation, in which the Federal Reserve has pledged to raise interest rates for the remainder of the year to combat increasing inflation. This week, Fed head Jerome Powell announced an additional 75 basis point raise, posing another danger to risky assets such as cryptocurrency. Economists worldwide are predicting a global recession, which might give investors more difficulties.
After today’s decline, the market capitalization of all cryptocurrencies is around $866 billion. This is a 71 percent fall from the high eight months ago.
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