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Bitcoin’s Struggle at $20,000 Keeps the Crypto Market on the Edge

Bitcoin’s Struggle at $20,000 Keeps the Crypto Market on the Edge

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Bitcoin struggled to hold above the closely watched $20,000 level, leading to a period of marked volatility that saw heavy weekend swings.

The largest cryptocurrency is down 4.8% on Monday and was trading at $19,914 as of 7:32 am in London. Ether dropped 7.8% at one point, but remained above $1,000. Altcoins such as Solana, Cardano and Dogecoin declined.

Bitcoin sank nearly 15% on Saturday, then bounced back above $20,000 with a surge of similar magnitude on Sunday. The swinging pattern suggests investor sentiment remains highly fragile as the Federal Reserve and other central banks work in full force to fight inflation with interest rate hikes that drain liquidity from the markets.

The T3 Bitcoin Volatility Index, a measure of the token’s expected 30-day volatility, is back to its mid-May highs, when the collapse of the TeraUSD stablecoin shook the markets.

Firoz Medora, Director of APAC Trading at the Gemini crypto platform of Cameron and Tyler Winklevoss, said in a note, “The toxic mix of bad news cycles and high interest rates has plagued the crypto market and we expect more volatility in the coming weeks. can do.” monday.

As bitcoin fell below $20,000 last week for the first time since the end of 2020, attention has turned to a cascade of liquidations that threaten to spoil the crypto path. Data from Coinglass shows that a total of $879 million was liquidated over the weekend.

Current trading patterns in bitcoin and ether indicate that some large crypto holders are “pursuing liquidations for profit to drive out other players,” said Chiente Hsu, chief executive officer of decentralized finance platform Alex.

Adding to the uncertainty is the immense pressure on DeFi applications. Their popularity as a source of high yields soared when pandemic-era excitement fueled a record-breaking crypto boom.

Now they are being forced to take unprecedented measures to protect themselves against a chain reaction of liquidations. Crisis-hit crypto lending platform Celsius Network Ltd said on Monday it needed more time to stabilize its liquidity and operations after freezing deposits in June.

Arthur Hayes, co-founder of crypto exchange BitMEX, said on Twitter: “Expect more wallets of bitcoin and ether forcibly selling bitcoin and ether when the market reveals who is swimming naked.”

He said he doesn’t know if the sale is over, but “for those skilled knife-catchers, there may be additional opportunities to buy coins from people who must kill every bid, no matter the cost.”

bitcoin falls below $20,000

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