Bitcoin has fallen to a significant new low in the current bear market.
Early on Saturday morning, Bitcoin dropped below $20,000, according to data from CoinMarketCap—a dreaded milestone seen as a crucial support level for the top cryptocurrency. At the time of writing, Bitcoin is trading at around $19,460, down over 6% on the day.
In prior bear markets, Bitcoin had never before fallen below the prior bull run’s peak.
Although BTC breaching $20,000 is a largely symbolic barrier, experts believe a drop below this level could trigger a wave of “forced liquidations”, in which large-scale crypto investors will be forced to close positions on BTC derivatives products because they now possess insufficient collateral. Such events would likely only further drive down the price of Bitcoin, triggering further liquidations.
At the time of writing, Ethereum, remains above its key support level of $1,000, albeit fractionally so; it currently trades at around $1,020.
The total market capitalization of all cryptocurrencies stands at around $853 billion, down over 5% in the last 24 hours.
According to Arthur Hayes, former CEO of BitMEX, $20,000 and $1,000 represent price levels for BTC and ETH, respectively, that if breached, would trigger “massive sell pressure.” And now Bitcoin is there.
Although crypto markets have not impressed all year, the current crash began in earnest early last month when major coins fell in correlation with the stock market. In a matter of days, Terra’s stablecoin UST and native token LUNA both imploded, erasing some $40 billion in value.
Since then, cryptocurrencies have been on a steady slide with tech stocks, a downturn accelerated by investors pulling millions of dollars out of digital asset funds amid fears of a worsening bear market.
Last Sunday, crypto lender Celsius paused all customer withdrawals, citing concerns that the firm would have insufficient funds to cover a run on the platform stemming from the depegging of cryptocurrency stETH from ETH. On Friday, the $2 billion fund Babel Finance went the same route, freezing withdrawals citing liquidity fears.
As the cascading effects of every new leg lower in the crypto market continue to play out, it remains unclear when BTC, ETH, and the broader crypto market will hit the bottom.
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