Bitcoin slips underneath the critical $20,000 mark.
Bitcoin Falls Below $20000 – Overview
Bitcoin‘s price has dropped below $20,000 for the first time since November 2020, perhaps igniting a new wave of selling and exacerbating the digital asset sector’s crisis.
On Saturday, the largest cryptocurrency, a benchmark for the broader crypto market, fell below $18,000, a drop of about 14%.
This pushed it below the previous bull market’s peak level in 2017, wiping out years of gains for long-term investors.
According to the website CryptoCompare, it rose to over $19,000 later in the day before falling to around $18,200 early the next day.
This week, traditional financial markets were rattled as a trio of major central banks, led by the Federal Reserve of the United States, raised borrowing costs to combat high inflation.
As a result, global markets had their worst week since the pandemic’s deadliest days in March 2020, as traders worried that the vigorous response would stifle the global economy or cause a recession.
The crypto market has been under particularly intense strain as the rush for returns sparked by central banks’ and governments’ huge stimulus measures during the height of the epidemic quickly reverses.
Investors and executives have been keeping a close eye on the price of bitcoin in recent days, fearful that a dip below $20,000 could cause massively leveraged bets to be liquidated, putting more pressure on the price and intensifying the credit crunch that has already hit large crypto lenders and traders.
In the previous week, two crypto lending companies, Celsius and Babel Financial, have restricted withdrawals.
In contrast, Three Arrows has failed to meet lender demands for additional funds to cover sour bets.
As a result, Luna and Terra, two popular currencies among crypto traders looking for ultra-high payouts, crashed last month.
On Friday, Conor Ryder, an analyst with research and data supplier Kaiko, stated, “The dominoes are falling now.”
“More dominoes will almost certainly lead to more downward price action, which will almost certainly snowball as a result of these liquidations.”
Bitcoin has lost more than 70% of its value from its high last autumn as investors flee more speculative assets while central banks tighten monetary policy.
From a high of $3.2 trillion, the total value of the crypto market has dipped below $1 trillion.
Ether’s price has also dropped below $1,000, bringing its year-to-date losses to more than 70%.
Smaller lenders have also curtailed or halted withdrawals, while Toronto-listed crypto platform Voyager signed a deal with trading firm Alameda on Friday to borrow more than $200 million.
“Today’s steps provide additional options for Voyager to offset current market challenges,” stated CEO Stephen Ehrlich.
“Voyager will only use the credit facilities if required to protect customer assets,” he stressed.
Ryder believes that if markets continue to fall, it will put further pressure on other lenders and dealers.
“If we get another leg down, it’ll be evident fairly soon who was just clinging on for dear life,” he said.
What is the lowest Bitcoin price ever?
Bitcoin’s first mini “bull run” began in April 2011, when it broke the $1 mark. Over the next three months, it increased by about 3,000 percent, reaching between $29 and $32 (depending on the source) in June 2011. By November 2011, the price has dropped to $2.
Is it possible for Bitcoin’s value to drop to zero?
Any cryptocurrency’s price can theoretically drop to zero, as demonstrated with the Terra Luna price crash. However, major changes would be required to allow for such a drastic drop in value for anything as popular and precious as Bitcoin.