The world’s top cryptocurrency, Bitcoin, has dropped below the $20,000 threshold for the first time since December 2020, trading data shows.
The coin had plunged around 13.7% over a 24-hour period as of Saturday afternoon to a low of $17,593, its weakest level in 18 months. It did then manage to regain some of the losses, pulling back up to $18,556. It has recovered slightly more on Sunday, trading in the green at $19,351 at around 12:00 GMT, but analysts are skeptical about further gains.
“Breaking $20,000 shows you that confidence has collapsed for the crypto industry and that you’re seeing the latest stresses,” Edward Moya, senior market analyst at OANDA, told Reuters, adding that “even the loudest crypto cheerleaders from the big rally are now quiet.”
“They are still optimistic long term but they are not saying this is the time to buy the dip.”
Michael Purves, the CEO of Tallbacken Capital, predicted an even more dramatic drop.
“I think this is going to slice through $15,000… The case for institutions to buy the dip is more challenged now given that the utility for Bitcoin has yet to be proven. There is so much velocity on the downside,” he stated.
Apart from the growing risk-off sentiment that has gripped the market due to the geopolitical situation, analysts say that problems within the crypto industry are also having an effect. For instance, cryptocurrency lending company Celsius froze withdrawals and transfers between accounts earlier this week, while there are reports that crypto companies have started letting employees go, fearing a further decline in cryptocurrency market prices.
Bitcoin’s current price drop also marked the breach of a notable price level – the token’s all-time high from the previous bull cycle. This is a typical situation for the cryptocurrency, which has seen several cycles of price run-ups followed by crashes. Some analysts are hopeful that a new upswing will be forthcoming that will take Bitcoin to new highs.
Overall, Bitcoin’s market capitalization tumbled to about $350 billion, a 73% drop from its all-time high last November, according to CoinGecko.
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