As the cryptocurrency market continues to fall, Bitcointhe world’s leading cryptocurrency, has fallen below $20,000 for the first time since December 2020.
Bitcoin has fallen for 12 consecutive days this June. The digital currency was down 12% to $18,700 on Saturday after struggling to reach $22,000 in the last 24 hours.
ethereum, the world’s second largest cryptocurrency, dipped below $1,000 to hit $977, an 11% loss in 24 hours. This is the lowest price for the digital currency since January 2021.
Cryptocurrency investors face significant increases in interest rates from the Central Bank of the United States (Fed) and a growing liquidity crisis that has put the main market players in financial difficulties.
On Wednesday, the Fed raised interest rates by 0.75, the biggest increase since 1994. This triggered a pullback in risk assets of all kinds, including stocks and cryptocurrencies.
The cryptocurrency market crashed at the end of last year and hasn’t stopped falling since. The current market is at a fraction of its heights at the end of 2021, when Bitcoin was trading close to $69,000.
The global cryptocurrency market capitalization is slightly above $820 billion, up from $3 trillion in November 2021.
The most devastating incident to date is the collapse of the Terra blockchain last month and the recent decision of the cryptocurrency lender Celsius Network Ltd. to stop withdrawals.
Terraform Lab stablecoin UST lost its $1 backing, which resulted in the collapse of Terra (LUNA)leaving investors with more than $60 billion in losses.
This week, the $3 billion cryptocurrency lender Celsius stopped withdrawalslocking users out of their funds and raising fears that they could face insolvency.
Three Arrows Capital is in the midst of its own liquidity crisis. The $10 billion cryptocurrency hedge fund is on the brink of insolvency after the slump in cryptocurrency markets reduced the value of its holdings.
3AC was a Terra investor and placed leveraged bets on various tokens including Bitcoin, Ethereum and Solana.
How far can bitcoin fall?
With the recent drop in the price of Bitcoin, various speculations have arisen in the market. Both fans and experts have given their predictions about what they think will happen in the future.
While most were bearish, Bloomberg analyst Mike McGlone’s forecast is quite bullish. The analyst sparked hope in the hearts of some with his prediction that $20,000 is the new $5,000 of bitcoin.
He took to Twitter to share his bitcoin prediction. Panic gripped investors as the digital asset fell to the $20,000 level, just above. While many believe this was a sign of a new downtrend, some said that it could actually be the bottom of the asset.
In his tweet, the Bloomberg analyst points out that the early days of adoption may prevail in contrast to the decline in bitcoin supply.
This argument is by no means new. The limited supply of Bitcoin has been one of its attractions for investors who believe that, in the end, the scarcity of the cryptocurrency will be what drives its price up.
McGlone suggests that bitcoin is approaching “very cold” levels and as such $20,000 could very well be the new $5,000.
$20,000 #Bitcoin May be the New $5,000 –
The fundamental case of early days for global Bitcoin adoption vs. diminishing supply may prevail as the price approaches typically too-cold levels. It makes sense that one of the best-performing assets in history would decline in 1H… pic.twitter.com/f5MImdhzgD
— Mike McGlone (@mikemcglone11) June 15, 2022