Bitcoin drops below $ 20,000 for the first time in two years

Bitcoin broke another floor this Saturday when it crashed less than $ 20,000his lowest level from December 2020. The best-known cryptocurrency is extending its downside as investors withdraw from riskier assets amid rising interest rates.

It previously hit $ 18,732, the lowest level since December 2020, but is bouncing slightly and is trading at $ 19,150, down 7%. Cryptocurrencies often are they float wildly on weekends, when other financial markets are closed.

Bitcoin is already down 59% this year, while ether, backed by rival cryptocurrency Ethereum, is down 73%. Bitcoin has been down a lot more since then the peak of US $ 68,924.78 last November.

The digital currency industry was rocked first with the collapse of the Earth and more recently after cryptocurrency lending company Celsius imposed a box of sorts and froze withdrawals and transfers between accounts. Then Binance did the same thing.

The sector also suffered losses after companies like Coinbase Global, Gemini and Blockfi claimed it thousands of employees would be laid off as investors offload risky assets.

Also, the cryptocurrency hedge fund Three capital arrows suffered heavy losses and said it was considering the sale of goods or a bailout, while another lender, Finance of Babelfollowed in the footsteps of Celsius on Friday.

In macro terms, experts believe that the collapse is due to the tightening of monetary policies of central banks, with the consequent fear of a market recession; and the measures taken by several companies in the sector before fear of a “crypto winter” (a long period of falling prices)which have generated mistrust among users.

In this line, the analyst of the Swiss private bank Julius Bear, Sipho Arntzen, believes that digital assets have benefited from the monetary policy of recent years, which has led to cheap and easily accessible liquidity for investors.

For this reason, experts explain, in these years of ultra-expansionary monetary policies, digital assets and technology companies benefited the mostbut they warn that with the tightening of these policies will be the most affected sectors.

Even after breaking through the key $ 20,000 level, historical data proves it bitcoin could find support around that markas previous sales show that the cryptocurrency often finds resistance points, said Mike McGlone, an analyst at Bloomberg Intelligence.

Bitcoin can “build a base of about $ 20,000 as it did about $ 5,000 in 2018-19 and $ 300 in 2014-15,” he said.

With information from EFE and Bloomberg

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