As Bitcoin touches its current lows, the cryptocurrency market plummets further, leading to more losses. The number one crypto by market cap has reached a key support level, and if the bulls fail to protect it, BTC price could return to the 2020 range.
Related Reading | By the numbers: Bitcoin records biggest single day drop since March 2020
At the time of writing, bitcoin (BTC) is trading at $21,800 with losses of 5% and 29% respectively over the past 24 hours and 7 days. A series of bad news around major crypto companies resulted in the price of BTC starting to plummet and the US Federal Reserve (FED) changing its monetary policy.
The general sentiment in crypto is fear as market participants prepare for further losses. according For Arthur Hayes, co-founder of crypto exchange BitMEX, investors are hedging against downside price action by buying put (sell) options contracts.
here is my …
— Arthur Hayes (@CryptoHayes) 14 June 2022
Hayes claims that options platform Deribit has recorded a high Open Interest (OI), totaling open options contracts at $20,000 for Bitcoin and $1,000 for Ethereum. In addition, Hayes believes that other “massive” investment vehicles may be “centered around attacks,” around those specific price levels.
In that sense, $20,000 seems like an important support level for bitcoin. This price point coincides with the bull-run peak of 2017 when BTC price climbed below $3,000 and into price discovery mode.
Past historical highs are usually important levels when an asset is trending downward. Many could buy the 2020 rally above $20,000, and they may not be willing to sell below this price. Hayes said the following:
As far as the chart goes, you better get out your Lord Satoshi prayer book, and hope the Lord shows mercy to the soul of the crypto markets. Because if these levels break, you can even turn off your computer because your charts will be useless for a while.
Can bitcoin enter a black hole?
If Bitcoin and Ethereum are unable to stay above those levels, Hayes predicts a potential doom for the crypto market. Markets seem poised for further losses as the Fed begins raising interest rates, even as BTC and ETH hold significant support. Hayes said:
If these levels break, 20k BTC and 1k ETH, we can expect massive selling pressure in the spot market as dealers hedge themselves. We can also expect that there will be some OTC (over the counter) dealers and those who will be unable to hedge properly and may go belly up.
Related Reading | Is bitcoin down yet? Here’s What the On-Chain Data Says
For the time being, some relief may be seen in the crypto market and traditional markets as the indicators enter oversold levels.
$spx Gaining the first significant support since the breakdown.
Still looks like it will probably eventually head towards covid lows but support is support.
give a jump pic.twitter.com/A1DbeAIPVD
— donAlt (@CryptoDonAlt) 14 June 2022