Cryptocurrencies continued their selloff on Tuesday, with bitcoin’s value briefly dipping below $21,000. Bitcoin fell as low as $20,834.50 before recovering to about $22,300 by 5:30 a.m. ET Tuesday morning. The fall is still 4.2% lower than Monday, when it hit its lowest since March 2020.
Bitcoin price crashes with billions in liquidation
The broader stock market, as well as cryptocurrencies, has been under strain. The plunge comes amid worries that major central banks’ higher interest rates will curb easy-money policies that have boosted speculative assets. This week’s dive in digital assets has reduced the overall cryptocurrency market value below $1 trillion for the first time since 2021.
Firms that deal in bitcoin and related areas are beginning to suffer as the price of cryptocurrencies continues to drop. This has added to the severity of an already severe market downturn. The current market sentiment is one of alarm. However, is this typical for the bitcoin ecosystem?
Bitcoin’s price has been extremely volatile. The crypto’s first substantial price rise occurred in 2010 when the value of a single bitcoin rose from less than a penny to $0.09. Since then, BTC has had several rallies and collapses as it transitioned into existence. Its highs and lows have been akin to Wild West’s, with investors never sure what to expect.
The cost fluctuations of bitcoin show investor optimism and disappointment with the promise. Satoshi Nakamoto, the pseudonym used by the anonymous bitcoin inventor(s), created it for day-to-day purchases and as a method to circumvent traditional banking systems after the 2008 financial crisis.
Fast forward, between January and May 2022, bitcoin’s price gradually fell, with closing prices never reaching more than $47,445 by the end of March before declining further to $28,305 on May 11. This was the first time since July 2021 that closing prices were below $30,000. On June 13, crypto prices dropped sharply, with Bitcoin falling below $23,000 for the first time since December 2020.
The present crypto downturn is different. Unlike prior crashes, the entire cryptocurrency market is facing opposition, criticism, and regulation concerns. Bitcoin and altcoins fell in tandem with US equities after the June 13 Wall Street opening bell as a selloff that began before the weekend continued.
During Monday’s trading session, the S&P 500 lost 3.9% and the Nasdaq Composite Index 4.7%, ahead of major remarks from the US Federal Reserve on its anti-inflation policy. The cryptocurrency market was hit particularly hard, with BTC/USD dropping 22.4% from the beginning to the present time.
On Monday, Celsius crypto lender froze withdrawals, adding to the stress in the cryptocurrency industry. The freeze was just another crisis less than a month after the collapse of Terra stablecoin rocked the market. On Monday, news of Celsius’s decision pushed the overall crypto market capitalization below $1 trillion to 977 billion USD for the first time since January 2021.
The collapse of Celsius hasn’t been good news for the cryptocurrency market. Traders are keeping an eye on MicroStrategy Inc., which is having difficulty with its bitcoin gamble. The firm amassed a large number of bitcoins, and if the price reaches a critical range it identified last month, it will most certainly need to post additional collateral for a loan.
Will BTC survive the present market crash?
Cryptocurrencies have become representative of a flight from speculative assets as global monetary policy tightens in response to inflation, leaving markets drained. Each dive stirs up the specter of whether or not it’s time to get in on the bargain because a low may be imminent.
On Monday, over $1.1 billion was liquidated in the crypto markets — around $685 million on the long side and $468 million on the short side, according to Coinglass data. That’s the most for both longs and shorts in at least three months, according to Coinglass data.
According to some traders, investors appear to be selling off en masse, triggering the crypto market’s plunge. Investors are also shunning riskier assets, as seen in the stock markets.
The current bear market has provided a new level of competition to Bitcoin, pushing up the price of its top competitors. Although altcoins have historically underperformed Bitcoin, things are different now that they’re facing increased regulatory pressures. According to certain experts, only a small percentage of altcoins will survive such market fluctuations.
The crypto market suffered a severe jolt this morning. Users flocked to Twitter to express their displeasure (or, in some cases, delight) with the current state of cryptocurrency. Whales and former whales have begun to speak up as the understanding that they’ve lost a substantial portion of their wealth sinks in.
All bets are off when it comes to predicting the BTC floor price or whether key trendlines would hold as support for some experts. Rekt Capital noted that the 200-week simple moving average (SMA) at $22,400 had not been accompanied by significant volume interest, implying that a test of lower levels is possible.
Following its previous all-time high in November, it was easy to predict a $100,000 Bitcoin price by the end of last year. Since Bitcoin’s significant decline, predicting its price is even more difficult.
According to the most strident Bitcoin naysayers, the cryptocurrency will plummet to $10,000 by 2022. However, a middle ground might suggest that it could still rise to $100,000 like many experts predicted late last year—on a delayed timetable.
Several experts are hesitant to provide a prediction but point to the long-term trend of increasing Bitcoin’s value. While traders and whales in the BTC market are confident that bitcoin is not going anywhere, it does not mean they will sit by and watch its value fall. They’ve been there and back before and will be doing it again.
Another factor driving the price rise of Bitcoin is the number of new consumers buying and learning about cryptocurrency. The exponential growth of new adoption may continue to push Bitcoin’s value higher and higher.
Another critical factor influencing Bitcoin’s price is a cycle known as halving, which is expected to occur in less than two years. Halvings have historically been linked with economic cycles of up and down. However, at the moment, BTC is on death row, and investors are losing hope amid recession fears.