Bitcoin slides below $20,000 to lowest since December 2020

A neon logo of the cryptocurrency Bitcoin is seen at the Crypstation cafe in downtown Buenos Aires, Argentina May 5, 2022. Picture taken May 5, 2022. REUTERS/Agustin Marcarian

June 18 (Reuters) – Bitcoin fell below $20,000 on Saturday to its lowest level in 18 months, extending the decline on investor concerns over growing industry problems and the general withdrawal of more risky.

The digital currency sector took a beating this week after cryptocurrency lending company Celsius froze withdrawals and transfers between accounts, while crypto companies began laying off employees and there are had reports that a cryptocurrency hedge fund ran into trouble. Read more

This coincided with a slide in equities, with US stocks suffering the biggest weekly percentage decline in two years on fears of rising interest rates and a growing likelihood of a recession. Read more

Bitcoin, the largest cryptocurrency, was last down 7.79% at $18,848, after touching $18,732, its lowest since December 2020.

It is down about 59% this year, while ether backed by rival cryptocurrency Ethereum is down 74%. In 2021, Bitcoin peaked at over $68,000.

“Breaking above $20,000 shows you that confidence has collapsed for the crypto industry and you are seeing the final tensions,” said Edward Moya, senior market analyst, The Americas OANDA on Saturday.

Moya said that “even the loudest crypto cheerleaders in the big rally are now quiet. They’re still bullish on the long run, but they’re not saying it’s time to buy the dip.”

The sector also suffered losses after companies such as Coinbase Global Inc (COIN.O), Gemini and Blockfi said they would lay off thousands of staff as investors dumped risky assets.

The slide hits retail investors who bought the asset.

“There are so many people who will be scarred forever,” Moya said, referring to retail buyers. “But there are still a lot of people who were about to get into space and there is always interest. Interest only exploded last year and most people started little.”

Jeffrey Gundlach, managing director of DoubleLine Capital, said Wednesday that he wouldn’t be surprised if bitcoin fell to $10,000.

Others say the deepening slide could force more investors to offload bitcoin, which has risen along with other risky assets in the pandemic stimulus era.

“The $20,000 level for Bitcoin is an important technical level and the drop below could trigger more margin calls leading to forced liquidations,” said Jay Hatfield, chief investment officer at Infrastructure Capital Management in New York.

“Bitcoin could drop below the $10,000 level this year as the Fed’s liquidity-fueled bubble bursts completely, with Bitcoin returning to pre-pandemic levels.”

At Saturday’s low, bitcoin was at risk of closing below key levels identified by technical analysis, which could add to bearish sentiment.

One such level was $19,225, the 76.4% Fibonacci retracement level of its rise during the pandemic. The other was $19,666, the cycle high of the previous bitcoin rally that peaked in 2017.

Reporting by Jahnavi Nidumolu in Bengaluru; Megan Davies and Burton Frierson in New York; Michelle Price in Washington; Editing by Andrew Heavens

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