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Bitcoin slides below $20,000 to lowest level in 18 months

Forex Jun 18, 2022 07:00PM ET
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© Reuters. FILE PHOTO: A neon logo of cryptocurrency Bitcoin is seen at the Crypstation cafe, in downtown Buenos Aires, Argentina May 5, 2022. Picture taken May 5, 2022. REUTERS/Agustin Marcarian
 
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(Reuters) -Bitcoin tumbled more than 13% at one point on Saturday, crashing below the closely watched $20,000 level to its weakest level in 18 months, as it extended a slide on investor worries about growing troubles in the industry and the general pull-back from riskier assets.

The digital currency sector has been pummeled this week after cryptocurrency lending company Celsius froze withdrawals and transfers between accounts, while crypto companies started laying off employees. There also were reports that a cryptocurrency hedge fund had run into trouble.

The developments have coincided with an equities slide, as U.S. stocks suffered their biggest weekly percentage decline in two years on fears of rising interest rates and the growing likelihood of recession.

The accelerated pace and depth of bitcoin losses in conjunction with the stocks rout could challenge support for the cryptocurrency from a range of investor groups.

While some institutions purchased bitcoin hoping it would offset declines in stocks and bonds, "it hasn't demonstrated that it is an uncorrelated asset," said Michael Purves, founder and chief executive officer of Tallbacken Capital.

"The case for institutions to buy the dip is more challenged now given that the utility for bitcoin has yet to be proven," he said.

"I think this is going to slice through $15,000," he said. "There is so much velocity on the downside."

Bitcoin, the biggest cryptocurrency, had dropped around 13.7% by Saturday afternoon to a low of $17,593 - its weakest level since December 2020 - before pulling back up to $18,556, still down 9.22%.

It has lost about 60% of its value this year, while rival cryptocurrency Ethereum-backed ether is down 74%. In 2021, Bitcoin peaked at more than $68,000.

"Breaking $20,000 shows you that confidence has collapsed for the crypto industry and that you're seeing the latest stresses," Edward Moya, senior market analyst at OANDA, said on Saturday.

Moya said that "even the loudest crypto cheerleaders from the big rally are now quiet. They are still optimistic long term but they are not saying this is the time to buy the dip."

The sector has also suffered losses after companies such as Coinbase (NASDAQ:COIN) Global Inc, Gemini and BlockFi said they would lay off thousands of employees as investors ditch risky assets.

The slide is hitting retail investors that bought into the asset.

"There's a tremendous amount of people that will be scarred forever," said Moya, referring to retail buyers. "But there are still a lot of people that were about to get into the space, and there's still interest."

TECHNICAL LEVELS

Jeffrey Gundlach, CEO of DoubleLine Capital, said on Wednesday he would not be surprised if bitcoin fell to $10,000.

Others say the deepening slide could force more investors to unload bitcoin, which rose along with other risky assets during the era of pandemic-related stimulus.

"The $20,000 level for Bitcoin is an important technical level and the dip below may trigger more margin calls resulting in forced liquidations," said Jay Hatfield, chief investment officer at Infrastructure Capital Management in New York.

"Bitcoin may dip below the $10,000 level this year as the Fed (Federal Reserve) liquidity-driven bubble fully bursts with bitcoin returning to its pre-pandemic levels," he said.

At Saturday's lows, bitcoin was in danger of closing below key levels identified by technical analysis, which could reinforce bearish sentiment.

One of those levels was $19,225, the 76.4% Fibonacci retracement level of its rise during the pandemic.

The other was $19,666, the cycle high for the previous bitcoin rally that peaked in 2017.

Bitcoin slides below $20,000 to lowest level in 18 months
 

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Comments (22)
احمد کیشانی
احمد کیشانی Jun 19, 2022 7:24AM ET
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Ilearnmoraboutfarextrede
Jay Garrelts
Jay Garrelts Jun 19, 2022 3:59AM ET
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Whoever came up with this idea to sell something that doesn’t actually exist except on my dell computer And it really isn’t there either brilliant it’s like selling the Brooklyn Bridge
Brain Stormer
Brainstormer Jun 19, 2022 1:40AM ET
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Some people are laughing at Bitcoin investors, but I wouldn't make fun of people, who through misjudgement made terrible mistakes. Euphoria is a deep pit that has lured many laypeople to happily descend into it. IMHO, Bitcoin isn't worth 50k. It's not worth 20k. It's not even worth $1. Why? Simply because it produces nothing. It doesn't generate cashflow. It has no intrinsic value. It doesn't produce anything that people need. It's merely a fad and fads are short lived by nature. It's sad to see so many hardworking people waste their hard earned money on a mirage that doesn't produce anything and doesn't generate cashflow, aka Bitcoin! Lessons will be learned, but in the process, lives will be shattered and wealths will be destroyed. Man doesn't learn from history!
Brad Albright
Brad Albright Jun 19, 2022 1:40AM ET
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That is a thoughtful perspective.
Kerry Ditto
Kerry Ditto Jun 19, 2022 12:31AM ET
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maybe people are selling bitcoins to buy stocks. if true, the rotation makes a lot of sense.
ZS Beck
ZS Beck Jun 19, 2022 12:31AM ET
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The whole crypto market is worth less than Apple's value. Nobody rotating anything here.
Al Ose
Al Ose Jun 18, 2022 10:05PM ET
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Let me blunt. We havent had a methodical and mechanical sell off day after day for no reason. Yhis is not panic selling. We are going 10-15% lower
Robert Cox
Robert Cox Jun 18, 2022 10:05PM ET
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Much lower, especially once the markets open on Tuesday.
Bonney Lake
Bonney Lake Jun 18, 2022 8:46PM ET
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we're quiet because we're buying the dip.freedom from Wall Street and the big pocket guys.
Nils Hullmann
Nils Hullmann Jun 18, 2022 6:02PM ET
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crypto ppl will go long on $rope soon
jason xx
jason xx Jun 18, 2022 4:03PM ET
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The Fed "liquidity driven bubble" is all still in the economy
IceIce Baby
IceIceBaby Jun 18, 2022 3:55PM ET
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So finally I can buy a graphic card on a normal price.
Atlantic Coast Money
Atlantic Coast Money Jun 18, 2022 3:45PM ET
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Remember when the computers supposedly “went out” in China causing a small crash 6 or so months ago?! I believe they are simply hacking the system and stealing all retails hard earned money in plain sight. If a computer outage can cause a crash, then why not use the same mechanism to simply steal money. Create panic. Empty the BTC bank. Will not be convinced otherwise. My heart goes out to those who bought in and got wiped out.
jason xx
jason xx Jun 18, 2022 3:45PM ET
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Never heard that before this is just panic selling losers locking in their losses and forced liquidations.
 
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