A neon logo of the Bitcoin cryptocurrency is seen in the Crypstation cafe in downtown Buenos Aires, Argentina, on May 5, 2022. Photograph taken on May 5, 2022. REUTERS / Agustin Marcarian
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June 18 (Reuters) – Bitcoin fell below $ 20,000 on Saturday to its weakest level in 18 months, widening a drop in investor concerns over growing problems in the industry and the general withdrawal of riskier assets.
The digital currency sector has been hit this week after cryptocurrency company Celsius froze withdrawals and transfers between accounts, while cryptocurrency companies began firing employees and there were reports that a fund cryptocurrency coverage had problems. Read more
It has coincided with a fall in equities, with US equities suffering the biggest weekly percentage drop in two years for fears of rising interest rates and the growing likelihood of a recession. Read more
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Bitcoin, the largest cryptocurrency, fell 7.79% for the last time to $ 18,848, after hitting $ 18,732 earlier, its lowest level since December 2020.
It has dropped about 59% this year, while rival cryptocurrency ether, backed by Ethereum, has dropped 74%. In 2021, Bitcoin reached more than $ 68,000.
“Breaking $ 20,000 shows you that confidence has collapsed for the crypto industry and that you are seeing the latest tensions,” Edward Moya, senior market analyst, The Americas OANDA said on Saturday.
Moya said that “even the strongest cryptographic animators of the great rally are now silent. They are still optimistic in the long run, but they do not say that this is the time to buy the descent.”
The industry has also suffered losses after companies such as Coinbase Global Inc (COIN.O), Gemini and Blockfi said they would lay off thousands of employees when investors abandon risky assets.
The slide is affecting retail investors who bought the asset.
“There are a lot of people who will be marked forever,” Moya said, referring to retail buyers. “But there are still a lot of people who were about to enter the space and there is still interest. Interest only exploded 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 deepening the slide could force more investors to unload bitcoin, which rose along with other risky assets during the era of the pandemic stimulus.
“The $ 20,000 level of Bitcoin is a major technical level and falling below it can lead to more margin calls resulting in forced liquidations,” said Jay Hatfield, investment director of Infrastructure Capital Management in New York.
“Bitcoin may fall below the $ 10,000 level this year as the Fed’s liquidity-driven bubble bursts completely with Bitcoin returning to pre-pandemic levels.”
At Saturday’s lows, bitcoin was in danger of closing below key levels identified by technical analysis, which could bolster bearish sentiment.
One such level was $ 19,225, the Fibonacci retracement level of 76.4% of its increase during the pandemic. The other was $ 19,666, the highest in the previous bitcoin rally cycle that peaked in 2017.
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Report by Jahnavi Nidumolu in Bangalore; Megan Davies and Burton Frierson in New York; Michelle Price in Washington; Edited by Andrew Heavens
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