Bitcoin tumbled again on Wednesday and approached the $20,000 mark as signs of increasing stress within the cryptocurrency industry mounted.
There is growing unease about the stability of cryptocurrency projects, large and small. According to data from CoinGecko, Tron founder Justin Sun’s stablecoin USDD, which has only been around for a month, has decoupled from the U.S. dollar, falling below 96 cents at one point. A tweet by the co-founder of cryptocurrency hedge fund Three Arrows Capital has sparked speculation that the fund has suffered significant losses.
Bitcoin fell as much as 8.6 percent to $20,081.95 on Wednesday, its nine-day losing streak, its longest losing streak since 2014. Ether is on the verge of falling below the $1,000 mark after plunging 10%.
After the Terra blockchain collapsed last month and cryptocurrency lender Celsius Network Ltd. The cryptocurrency market, which began to slide late last year on expectations of tighter monetary policy, is now showing signs of widespread panic following the recent decision to suspend withdrawals. Even long-term investors who have not sold until now are under pressure, according to research firm Glassnode.
“What we’re seeing now is the underdog exiting the market, and looking back, those who can only be seen as overly speculative and over-leveraged are washed out,” said Mati Greenspan, founder of Quantum Economics.
Bloomberg Industry Research analyst Mike McGlone said historical data suggests bitcoin could find key support around $20,000, as past sell-offs suggest it typically shows resilience there.
Prices could “build a bottom around $20,000, as they did in 2018-19 around $5,000 and 2014-15 around $300,” he said in a Wednesday report.
