Bitcoin went below $20,000 for the first time since December 2020, as mounting evidence of escalating stress in the cryptocurrency industry and a backdrop of monetary tightening contributed to the decline.
At 11:54 a.m. Pakistan time, the price of Bitcoin fell as much as 6% to $19,377.08. For twelve days in a row, the largest token by market capitalization has decreased. Before reversing losses, the price of ether nearly reached $1,000 before sliding to $999.86, the lowest level since January 2021.
“Rising fears of a recession are stifling interest in risky assets, so crypto traders are hesitant to purchase Bitcoin at current low prices,” said Edward Moya.
The Federal Reserve increased its main interest rate by three-quarters of a percentage point on June 15, the highest increase since 1994, and central bankers have suggested that they would continue to aggressively increase rates this year to combat inflation. A higher-rate environment has been detrimental to riskier assets such as cryptocurrencies, contributing to Bitcoin’s almost 70 percent decline from its November all-time high.
After the collapse of the Terra blockchain last month and the recent move by cryptocurrency lender Celsius Network Ltd. to restrict withdrawals, a market that began tumbling late last year due to forecasts of a less flexible Federal Reserve is now exhibiting signs of broader volatility. Three Arrows Capital, a cryptocurrency hedge fund, announced large losses and indicated that it was considering asset sales or a bailout. According to experts, even long-term investors who have resisted selling up until now are experiencing pressure.