Bitcoin Price Falls Below $20,000 As Crypto Sell-Off Deepens


Bitcoin price fell below $20,000 and below a level widely watched by cryptocurrency enthusiasts as a sharp crypto selloff showed no signs of abating.

“Bitcoin breaking the $20,000 price level was a long time coming, given the pessimism we have in the market,” AvaTrade market analyst Naeem Aslam said. The fallout from the collapse of the Terra USD stablecoin in May will continue to reverberate, he said, and it is depressing sentiment.

There is no specific significance at the $20,000 level, but the price slipped below $19,783, a previous all-time high set in 2017, according to Coinbase. Bitcoin bulls have long maintained that the cryptocurrency has entered a new stage of development and acceptance in recent years, and that it will not fall below this 2017 level.

“It will be very painful for many investors,” said Yuya Hasegawa, market analyst at Japanese crypto exchange Bitbank Inc. People will lose faith in the crypto market as a whole, but seasoned crypto investors and those who believe in its long-term prospects will see an opportunity to buy at discounted prices, he said.

For Wayne Sharp, a retired investment advisor in Columbus, Ohio, the cratering crypto market came as no surprise. She bought around $10,000 worth of bitcoin in 2020 and has been sitting there ever since, with no intention of selling or buying more. “I saw a lot of cycles. I’ve been watching this for 45 years,” she said. “Humans just make the same mistakes over and over again.”

Ether, another major cryptocurrency, fell below $1,000 on Saturday, trading at $948.46, according to CoinDesk, its lowest level since January 2021.

Bitcoin’s fall from its all-time high of $67,802 in November contributed to an estimated $2 trillion wipeout in the broader market. Crypto’s total market cap, which peaked in November at nearly $3 trillion, stood at around $844 billion on Saturday, its lowest since January 2021, according to data provider CoinMarketCap.

Bitcoin traded around the $30,000 mark for most of May before falling sharply again in June after another inflationary shock and concerns over rising US interest rates. Investors offloaded assets considered risky, such as cryptocurrencies and tech stocks.

Individual investors have been receiving margin calls, with about $310 million in collateral pledged by about 88,000 liquidated retail traders in the past 24 hours, according to data provider CoinGlass. That compares to $1 billion earlier this week.

A growing number of previously high-flying crypto firms have felt the pain of what has been dubbed a “crypto winter.” Cryptocurrency lender Babel Finance told clients on Friday it was suspending redemptions and withdrawals of all products, citing “unusual liquidity pressures.” One of the biggest crypto lenders, Celsius Network LLC, did not let users withdraw funds for about a week, citing extreme market conditions.

Cryptocurrency-focused hedge fund Three Arrows Capital Ltd. has hired legal and financial advisors to help find a solution for its investors and lenders after it suffered heavy losses from a market sell-off of digital assets, the company’s founders told The Wall Street Journal.

The sudden squeeze on available and usable capital, often referred to as liquidity, is exacerbating selling, and it’s not something that can be easily fixed, said Ryan Shea, an economist at crypto investment firm Trakx. Unlike traditional markets, “there is no central bank to step in and question, the process just has to happen,” he said.

The surge in cryptocurrency valuations over the past two years has been helped by investments from big-name companies such as Tesla Inc.

and a period of lower interest rates during the pandemic that encouraged individuals stuck at home to buy riskier assets in the hope of higher returns.

The interest rate increases currently enacted by the Fed come as blowouts in some crypto projects have rippled through the ecosystem. So-called stablecoin TerraUSD broke its $1 peg last month following intense selling pressure, leaving it and its original sister cryptocurrency Luna now nearly worthless. As its developers sought to defend TerraUSD’s peg, they sold reserves of bitcoin, depressing the price of it and other assets.

More recently, crypto investors have been concerned about a derivative of the cryptocurrency ether that is stalled until the Ethereum network switches to a less energy-intensive model. The so-called Lido staked ether recently traded at a lower price than the ether itself.

“Crypto has enough problems. He doesn’t need the macro,” said Noelle Acheson, head of market insights at crypto lender Genesis Global Trading, in reference to rising interest rates and inflation concerns.

Write to Elaine Yu at [email protected] and Caitlin Ostroff at [email protected]

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