Bitcoin retests the bottom support line, continuing to erase years of gains for long-term holders.
On June 18, Bitcoin fell below the key threshold of $20,000 for the first time since December 2020. This value is the “value technical” support line opened by strategists last week and is also regarded by investors as “psychological” support Wire.
The slide continued over the weekend. On the afternoon of June 19, Bitcoin fell below $18,000/piece, and fell to about $17,616/piece during the period; Ethereum once fell 19% on the day to $881/piece, the lowest level since January 2021. .
As of 15:15 on June 19, both Bitcoin and Ethereum rebounded slightly, hovering at $18,227/piece and $959/piece respectively.
The deep price evaporation has shrunk the market cap of cryptocurrencies. As of now, CoinGecko data shows that the current total market value of cryptocurrencies is about 852.6 billion US dollars, far below the highest historical value of 3 trillion US dollars in November last year.
The continued decline could trigger a new wave of selling and deepen the credibility and crisis plaguing the crypto-asset industry. According to CoinGlass, the total liquidation in the cryptocurrency market over the past 24 hours was $566.7 million, with bitcoin and ether at $271 million and $192 million, respectively.
The incessant bad news in the crypto space comes with the tightening of major central banks around the world, as the cryptocurrency market, which previously benefited from massive stimulus measures, is under deepening pressure.
This week, in order to curb inflation, the Federal Reserve raised interest rates aggressively by 75 basis points, the largest increase since 1994. The Fed said it will continue to raise interest rates sharply this year to curb inflation. Then, the Bank of England raised interest rates for the fifth time since December last year, raising the benchmark rate to 1.25%, the highest level in 13 years. In the same period, the Swiss National Bank raised interest rates by 50 basis points in the face of inflation data that hit a 14-year high, the first increase since the outbreak of the global financial crisis in 2007.
Traditional financial markets were also hit, with global equities recording their worst week since March 2020. The S&P 500 fell about 5.79%, the Dow fell about 4.79%, and the Nasdaq fell 4.78%; the Stoxx 600 fell 4.6%; the FTSE All-World index fell 5.6%.
The latest round of pressure started and continued since the de-pegging of TerraUSD from the U.S. dollar. Subsequently, cryptocurrency lender Celsius decided to stop withdrawals, and crypto hedge fund Three Arrows Capital failed to meet the lender’s request for additional funds on Saturday, becoming the latest “victim” of the cryptocurrency price drop and also triggering a new wave of investors. round of worries.
Noelle Acheson, director of crypto-asset lender Genesis, said: “What we’re seeing right now is that more liquidations push down the price and sentiment of cryptocurrencies, including bitcoin, which in turn leads to more liquidations and negative sentiment. There has been some liquidation, but that will be over at some stage.”
“From the beginning of this year to the present, many traders in the circle have been bearish on Bitcoin,” a cryptocurrency trader told reporters. Previously, everyone was worried that Bitcoin’s fall below $20,000 might force large leveraged bets in the market. liquidation, thereby putting more pressure on Bitcoin. Now, everyone is nervously hoping that Bitcoin can stabilize above the level of $19,000 per piece.
Bloomberg Intelligence analyst Mike McGlone said in a June 15 report that even if the key $20,000 mark is breached, historical data shows that Bitcoin may find key support around this mark, as previously The cryptocurrency typically finds points of resilience, as shown by the sell-off.
In Mike McGlon’s view, Bitcoin may now establish a price base of around $20,000 like it did in 2018-2019 and 2014-2015 when it was $5,000/unit and $300/unit, respectively. “Lower volatility and higher prices are signs of maturity for digital assets,” he added.
“In the field of digital assets, due to the relatively short historical cycle, there are no absolutely effective technical indicators.” Yu Jianing, co-chairman of the Blockchain Special Committee of the China Communications Industry Association, told the 21st Century Business Herald reporter last week. Starting from experience, the high point of the last bull market ($19,798/piece) is a key support level. Because in Bitcoin’s bull-bear conversion cycle, the bottom of the bear market has never exceeded the high of the previous bull market.
If $19,798 breaks down, many historical laws will fail, and the market may experience a further sharp retracement.
Yu Jianing said that digital assets such as Bitcoin have been highly financialized, so the price is likely to be unable to escape the cyclical law: if there is a rise, there will be a fall, and if there is a fall, there will be a rise.
However, he reminded that the technical side has never been a real risk, and the biggest risk comes from macro factors. This round of deep adjustment is mainly closely related to the global financial market. “The number of subsequent interest rate hikes by the Fed, the adjustment of benchmark interest rates, and even the scale of the reduction of the balance sheet are still very unknown. The global financial market is facing severe challenges, and it is still unknown where the price of Bitcoin will ultimately support.”
It believes that the global encrypted asset market will move towards mainstreaming, compliance and institutionalization, which is an irreversible trend.
In the early stage of the development of encrypted assets, global investors were mainly retail investors. With the gradual maturity of the encrypted asset market system, the proportion of institutional investors has increased day by day, and they have now become important participants in the market.
“Institutional investors emphasize decentralized investment and long-term value investment. Bitcoin represents the macro trend of the long-term development of the digital economy, which is an important reason why it is favored by value investors.” Yu Jianing added that institutions including hedge funds are deeply involved The field of encrypted assets has become a long-term trend and has a greater impact on the future development of encrypted assets.
Investors continue to be on the defensive after last year’s liquidity-driven bull run in crypto assets, Alkesh Shah, head of crypto and digital asset strategy at Bank of America, wrote in a June 17 report. “Despite the pain, de-bubbling the industry may be healthy as investors turn their attention to crypto-asset projects with clear roadmaps that involve cash flow and profitability rather than pure revenue growth .”
