Bitcoin price fell below $19,000 for the first time since December 2020 as evidence of deepening tensions in the crypto industry that continue to pile up amid monetary tightening.
Bitcoin price fell below $19,000 for the first time since December 2020 as evidence of deepening tensions in the crypto industry that continue to pile up amid monetary tightening.
The largest digital token by market value fell 11% to $18,334 on Saturday, marking a record 12th consecutive daily decline according to Bloomberg data. Ether breached $1,000 and fell nearly 13% to $951, its lowest level since January 2021. The two crypto market authors are both down more than 70% from all-time highs. set up in early November.
Noelle Acheson, head of markets at Genesis, one of the largest and most well-known lenders in the digital asset space.
The most recent price drop pushed Bitcoin below $19,511, the high the coin reached during its last bull cycle in 2017, which it reached later that year. Throughout its nearly 12-year trading history, Bitcoin has never dropped below its previous cycle high.
Altcoins are no exception to investor appetite following Bitcoin’s plunge, with every token on Bloomberg’s crypto screen trading in the red. Cardano, Solana, Dogecoin, and Polkadot recorded 24-hour declines of 9% to 12% on Saturday, while privacy tokens like Monero and Zcash lost up to 11%.
The toxic combination of bad news cycles and higher interest rates has harmed riskier assets like cryptocurrencies. The Federal Reserve raised its key interest rate on June 15 by 3/4 percentage point – the biggest increase since 1994 – and central banks signaled that they would continue to raise interest rates aggressively. this year in the fight against inflation.
“Investors are continuing to take a defensive stance following the technical asset bull market,” said Alkesh Shah, head of crypto and digital asset strategy at Bank of America Corp. last year’s liquidity oriented number. “Despite the difficulty, removing the ice of the industry can be good as investors shift their focus to projects with a clear path to cash flow and profitability rather than pure revenue growth. ”
Greater signs of stress emerged with the Terra blockchain collapse last month and worsened this week following the recent decision of crypto lender C Network Ltd.
Adding to that mood, crypto hedge fund Three Arrows Capital has suffered massive losses and said it is considering an asset sale or a bailout, while another lender, Babel Finance, follow in Celsius’ footsteps on Friday. According to researcher Glassnode, even long-term holders who have avoided selling so far are under pressure.
“After C, the focus of the past few days has been on Three Arrow Capital and Babel Finance.” Teong Hng, chief executive officer of Hong Kong-based crypto investment firm Satori Research. “Su Zhu, the founder of 3AC, appears to have gone missing in action, after intentionally suffering massive losses due to the massive drop in crypto during this round.”
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Stablecoins – a crypto-asset pegged to the value of a fiat currency like the US dollar – also struggled.
The top four stablecoins saw net outflows from exchanges last week that were 4.5 times larger than the week before, Bank of America Shah said. Stablecoins are often relied on by crypto traders to move funds around the ecosystem without exiting to traditional currencies, so the continued outflows suggest that investors remain on the defensive. , he added.
According to Mike McGlone, an analyst with Bloomberg Intelligence, even if it hits the critical $20,000 level, historical data suggests that Bitcoin could find critical support around that mark as previous sell-offs demonstrate where tokens often find points of resilience.
Bitcoin could “build a base around $20,000 as it did at around $5,000 in 2018-19 and $300 in 2014-15,” he said in a note on Wednesday. “Decreased volatility and rising prices are prominent signs of a maturing digital store of value.”
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The crypto market is currently at a fraction of its peak in late 2021, when Bitcoin traded near $69,000 and traders poured cash into speculative investments. The total market capitalization of cryptocurrencies was around $870 billion on Saturday, down from $3 trillion in November, according to valuation data from CoinGecko.
