Neon logo of the cryptocurrency Bitcoin is seen in the cafe Crypstation, in the center of 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 lowest level in 18 months, raising investor concerns about growing problems in the industry and the overall withdrawal of riskier assets.
The digital currency sector was hit this week after cryptocurrency lending company Celsius froze withdrawals and transfers between accounts, while crypto companies began firing employees and there were reports that a cryptocurrency hedge fund was in trouble. Read more
This coincided with a decline in shares, with US stocks suffering the largest weekly decline in two years due to fears of rising interest rates and a growing likelihood of recession. Read more
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Bitcoin, the largest cryptocurrency, last fell 7.79% to $ 18,848, previously reaching $ 18,732, its lowest level since December 2020.
It has fallen by about 59% this year, while the competitive cryptocurrency supported by Ethereum has fallen by 74%. In 2021, bitcoin peaked at over $ 68,000.
“The $ 20,000 break shows you that trust has collapsed for the crypto industry and that you are seeing the latest stresses,” said Edward Moya, senior market analyst at The Americas OANDA, on Saturday.
Mine said that “even the loudest crypto cheerleaders from the big rally are quiet now. They are still optimistic in the long run, but they don’t say it’s time to buy the fall.”
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 gave up risky assets.
The decline is hitting retail investors who have bought the asset.
“There are a huge number of people who will be scarred forever,” Moya said, referring to retail buyers. “But there are still a lot of people who were going to enter the space and there is still interest. Interest only grew last year and most people started small.”
Jeffrey Gundlach, CEO of DoubleLine Capital, said Wednesday that he would not be surprised if bitcoin fell to $ 10,000.
Others say the deepening decline could force more investors to unload bitcoin, which rose along with other risky assets during the era of pandemic stimuli.
“The $ 20,000 level for bitcoin is an important technical level, and the decline below could trigger more margin claims, leading to forced liquidations,” said Jay Hatfield, chief investment officer at Infrastructure Capital Management in New York.
“Bitcoin could fall below $ 10,000 this year as the Fed’s liquidity bubble bursts and Bitcoin returns to pre-pandemic levels.
At its lowest levels on Saturday, bitcoin was threatened with closing below key levels identified by technical analysis, which could boost bearish sentiment.
One of those levels was $ 19,225, the Fibonacci correction level of 76.4% of its rise during the pandemic. The other was $ 19,666, the highest value of the cycle for the previous bitcoin rally, which peaked in 2017.
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Report by Jahnavi Nidumolu in Bengaluru; Megan Davis and Burton Freerson in New York; Michelle Price in Washington; Edited by Andrew Havens
Our standards: Thomson Reuters’ principles of trust.
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