Bitcoin fell below $18,000 on Saturday before climbing above $20,000 on Sunday evening, a level that cryptocurrency enthusiasts regularly monitor. Bitcoin rose 10% to $20,571.29 on Sunday evening, according to CoinDesk, after falling as low as $17,601.58 on Saturday afternoon. On Saturday, the digital currency plummeted below $20,000, prompting fears that it could collapse far lower. It has dropped 70% of its value from its November high.
Concerns over the Federal Reserve’s measures to tackle higher-than-expected inflation have sent stocks and cryptocurrencies into a bear market. Major businesses in the market, like Coinbase Global Inc., COIN 0.33 percent the largest cryptocurrency exchange in the United States, have recently announced job losses.
The $20,000 threshold isn’t very significant, but according to Coinbase, the price has slipped below $19,783, the previous high water mark set in 2017. Bitcoin bulls have long claimed that the cryptocurrency has entered a new period of development and acceptance in recent years, and that it will not fall below the level reached in 2017.
“It will be a lot of pain for a lot of investors,” said Yuya Hasegawa, a market analyst at Japanese crypto exchange Bitbank Inc.
People will lose faith in the cryptocurrency market as a whole after the Bitcoin plunge, he warned, but seasoned crypto investors and those who believe in its long-term potential would see an opportunity to buy at a discount.
Wayne Sharp, a former investment adviser in Columbus, Ohio, was not surprised by the crypto market’s collapse. She purchased $10,000 in bitcoin in 2020 and hasn’t sold or purchased any since. “I’ve seen quite a few cycles.” She stated, “I’ve been watching this for 45 years.” “Humans are prone to repeating the same mistakes.”
After plummeting below $1,000 on Saturday, another popular cryptocurrency, Ether, rose 19 percent to $1,141.52. It fell to $880.93, its lowest level since January 2021, according to CoinDesk.
Three Arrows Capital Ltd., a cryptocurrency-focused hedge fund, has employed legal and financial advisers to help work out a solution for its investors and lenders after suffering huge losses as a result of a broad market selloff in digital assets.
The rise in cryptocurrency valuations over the last two years has been aided by high-profile investments from companies such as Tesla Inc. TSLA 1.72 percent, as well as a period of low interest rates during the pandemic, which encouraged people stuck at home to buy riskier assets in the hope of higher returns.
More recently, crypto investors have expressed concern over a derivative of the cryptocurrency ether that is locked up until the Ethereum network switches to a less energy-intensive architecture. Lido-staked ether has recently been trading at a discount to ether itself.