As bearish sentiment floods financial markets, experts are pondering whether Bitcoin Will fall below the $20,000 mark—and what if it does.
BitcoinNow firmly in a bear market, it is currently trading above $22,000, a marked drop from its all-time high of nearly $69,000 – and a decline that most observers attribute to macro-economic factors such as rising inflation and interest. attributed to deteriorating economic conditions. rates.
Right now, all eyes are on the $20,000 price line – not only because it is an important psychological resistance level, but also because it represents the peak of Bitcoin’s last bull run in 2017.
In past bear markets, bitcoin has never fallen below the value marked by the peak of the previous bull run. However, the difference this time around is that bitcoin has much less distance to travel to cross that mark.
Swan bitcoin analyst Sam Callahan believes that, based on experience from past bear markets, it is possible that bitcoin could fall by more than 80% from its all-time high, as it did in December 2018 when it hit $8. had fallen above 3,000. This would mean that bitcoin would fall as low as $13,800 in this cycle.
But Callahan also isn’t so worried if that happens.
“It is important to note that bitcoin’s investor base is very different and more sophisticated than previous bear markets,” Callahan said. “If bitcoin breaks below $20,000, I think we will see substantial buying pressure at those discounted price levels as bitcoin’s long-term value proposition remains intact.”
Yuya Hasegawa, a cryptocurrency market analyst at Japanese crypto exchange BitBank, shared this sentiment.
Last month, Hasegawa reported decrypt that could fall as bitcoin At least $12,200 Bear market during this period. But now his outlook is more optimistic.
Hasegawa added: “I think bitcoin could temporarily drop below $20,000, but could quickly correct around levels,” Hasegawa said. decrypt Via email.
Not everyone is so optimistic.
Marcus Sotirio, an analyst at UK-based cryptocurrency firm Global Block, believes that if bitcoin breaks below the $20,000 mark, there could be more downsides. Sotirio alludes to controversy over crypto lending company Celsiusthe possibility that the company may go bankrupt, and liquidity The crisis forced it to halt all user withdrawals earlier this week.
,Celsius [is] in big trouble,” he said decrypt Via email, “and if whales who have bet on bitcoin and Ethereum gets liquidated, it will result in further decline. ,
“I think a lot of people are scared of a liquidation cascade, like Celsius called margin, and they now have a liquidation value of around $17,000 on their BTC position,” Sotirio said.
Compelled liquefaction This occurs when investors must unexpectedly, and involuntarily, close their accounts on bitcoin derivative products (such as futures and options) after they have hit insufficient collateral to maintain those positions. Such forced selling puts additional downward pressure on the price of bitcoin, which can then drive the price further down, and in turn lead to more liquidations – hence the “cascade”.
Arthur HayesThe former CEO of BitMEX similarly highlighted the potential for such risk. Twitter thread yesterday, Pointing to the cryptocurrency derivatives market, Hayes said that the majority of open interest – the number of futures and options contracts yet to be settled – is currently at $20,000 for bitcoin and $1,000 for ethereum.
If these levels are broken, then $20k $BTC and $1k $ETH, we can expect massive selling pressure in the spot markets as dealers hedge themselves. We can also expect that there will be some OTC dealers and those who will be unable to hedge properly and may go belly up.