Bitcoin (BTC), the most popular cryptocurrency and crypto-asset, fell below USD 20,000 for the first time since December 2020, while the second largest crypto-asset, ethereum (ETH), fell crossed the USD 1,000 level for the first time since January 2021.
As of 08:19 UTC, BTC trades at $19,161 and drops 10% in one day and 34% in one week, ETH trades at $996 and drops 11% in one day and 40% in one week . The other crypto-assets in the top 10 club are down 10% to 12%.
BTC price chart:
As noted, analysts considered the $20,000 for BTC and $1,000 for ETH levels to be key prices to watch.
A break below the $19,511 level could cause many hodlers to capitulate and gradually reduce leverage and most open interest on BTC options is based on the $20,000 strike price, “which can contribute to selling pressure in the market if the price falls below,” Vetle Lunde and Jaran Mellerud at Arcane Research says a note, per Bloomberg.
So far, liquidations in the crypto market have approached $170 million in the past 4 hours, per coin glass The data.
If these levels break, we can expect “massive selling pressure” in spot markets as dealers hedge, and it could even cause some unhedged OTC dealers to “go bankrupt”, old BitMEX CEO Arthur Hayes warned this week.
“As for the charts, you better pull out your Lord Satoshi prayer book and hope the lord shows kindness to the soul of #crypto markets. [Because] if these levels break, you might as well turn off your computer [because] your cards will be useless for a while,” he said.
However, historical data shows that BTC may find key support around $20,000 as previous selloffs show where the token typically finds points of resilience, Mike McGlone, analyst for Bloomberg Intelligencesaid, adding that BTC could “build a base around $20,000 like it did around $5,000 in 2018-19 and $300 in 2014-15.”
However, Digital Galaxy CEO Mike Novogratz said he believes BTC and ETH are “much closer to the bottom” than stocks which he believes could fall another 15% to 20%, but investors should still proceed with caution.
Either way, according to Ainsley To, Noelle Acheson and Konrad Laesser of Genesis Trade“the sentiment in the crypto markets is that the unknown unknowns are the most important right now.”
“The resurgence of counterparty risk reminds us that not everything that matters in risk management can be precisely quantified. Risk is what remains after you think you’ve thought of everything,” they told Bloomberg.
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