During the trading session on June 18, Bitcoin continued to decline after falling below the key support level of $20,000 per coin, for the first time since November 2020. The lowest fell to $18,811.4 in the day, and it fell by more than 10% in the day. This is already the 12-day losing streak for Bitcoin. The cryptocurrency market has lost $2.1 trillion in 7 months.
According to CoinGecko, Bitcoin has fallen more than 70 percent since peaking at $69,000 in November last year. This recent downtrend in Bitcoin has been dubbed a “free fall” by The New York Times. In addition, the second-largest cryptocurrency ETH also plunged as much as 10% on the day to $997.75, the lowest level since January 2021.
It is noticed that the total market value of the entire cryptocurrency market in November was 3 trillion US dollars, and the current total market value is about 900 billion US dollars, that is to say, in just 7 months, the cryptocurrency market has ” “Evaporated” lost $2.1 trillion, close to the market value of an Apple (AAPL, $131.56, $2.13 trillion).
Former BitMEX CEO Arthur Hayes previously said that $20,000 and $1,000 represent price support levels for bitcoin and ethereum, respectively, which, if breached, would trigger “enormous selling pressure.”
In addition, Bitcoin analyst Sam Callahan of Bitcoin exchange Swan also believes that based on the experience of previous bear markets, Bitcoin may fall by more than 80% from its all-time high. This means Bitcoin will drop to $13,800.
According to CNBC, the Federal Reserve raised interest rates by 75 basis points on Wednesday (the largest increase since 1994), causing investors to flee from various risk assets including cryptocurrencies. Aggressive rate hikes by the Federal Reserve and a worsening liquidity crunch have left these investors in financial distress.
Among them, Three Arrows Capital is in the midst of its own liquidity crisis. The $10 billion crypto hedge fund is reportedly on the brink of bankruptcy, with Three Arrows being an investor in Terra and making leveraged bets on numerous tokens including bitcoin, ether and solana . The company’s co-founder, Zu Shu, told The Wall Street Journal that Three Arrows is considering selling assets and considering being acquired by another company to avoid collapse.
The “Daily Economic News” reporter noticed that the Terra coin bet by Three Arrows Capital is a stable currency, which should have been worth $1. As a result, investors began to lose confidence in cryptocurrencies and transferred funds to assets with lower risk. As of now, the value of Terra coins has been infinitely close to 0 ($0.000054). This week, Celsius, an experimental crypto bank, stopped customers from withdrawing Terra coins, renewing concerns that the crypto market could be facing a meltdown.
“If Bitcoin falls below $20,000, it’s better to turn off the computer because the charts are useless.” Hayes told Decrypt, a media focused on digital assets.