Bitcoin (BTC), the most popular cryptocurrency and crypto asset, fell below $20,000 for the first time since December 2020, and the second largest crypto asset, Ethereum (ETH), broke the $1,000 mark for the first time since January 2021.
At 08:19 UTC, BTC is trading at $19,161 and is down 10% for the day and 34% for the week, ETH is trading at $996 and is down 11% for the day and 40% for the week. Other crypto assets from the top 10 fell by 10-12%.
As reported, analysts considered the levels of $20,000 for BTC and $1,000 for ETH to be the key prices to watch out for.
A break below the $19,511 level may lead to the capitulation of many hodlers and a reduction in leverage, and most of the open interest in BTC options is based on the strike price of $20,000, “which may contribute to pressure from sellers in the spot market.” the market, if the price falls lower,” Vetle Lunde and Yaran Mellerud of Arcane Research said in a note, Bloomberg reports.
According to Coinglass, over the past 4 hours, the liquidation on the crypto market has approached 170 million US dollars.
If these levels break, we can expect “massive selling pressure” in spot markets as dealers hedge themselves, and this may even lead to some non-hedged OTC dealers “going broke,” former BitMEX CEO Arthur Hayes warned this week.
However, historical data shows that BTC could find key support around $20,000, as previous sell-offs demonstrate where the token typically finds points of resilience, said Mike McGlone, analyst at Bloomberg Intelligence, adding that BTC could “build a base of around $20,000.” as it was at about $5,000 in 2018-2019 and $300 in 2014-2015.”
However, Galaxy Digital CEO Mike Novogratz said that, in his opinion, BTC and ETH are “much closer to the bottom” than stocks, which, according to him, could fall by another 15-20%, but investors should proceed cautiously anyway.
In any case, according to Ainsley To, Noel Acheson and Conrad Lesser of Genesis Trading, “the sentiment in the cryptocurrency markets is that unknown unknowns are the most important at this point in time.”
“The resurgence of counterparty risk is a reminder that not everything that matters in risk management can be accurately quantified. Risk is what remains after you think that you have thought everything through,” Bloomberg quotes them.