21st Century Economic Reporter Hu Tianjiao reports from BeijingBitcoin has once again tested its bottom support line, continuously erasing the long-term gains of its holders.On June 18th Beijing time, Bitcoin fell below the critical threshold of $20000 for the first time since December 2020
21st Century Economic Reporter Hu Tianjiao reports from Beijing
Bitcoin has once again tested its bottom support line, continuously erasing the long-term gains of its holders.
On June 18th Beijing time, Bitcoin fell below the critical threshold of $20000 for the first time since December 2020. This value is the "value technology" support line set by strategists last week and is also seen by investors as a "psychological" support line.
The decline continued over the weekend. On the afternoon of June 19th, Bitcoin further broke below $18000 per coin, dropping to approximately $17616 per coin during this period; Ethereum briefly fell 19% to $881 per coin, its lowest level since January 2021.
As of 15:15 on June 19th, Bitcoin and Ethereum have both rebounded slightly, hovering around $18227 per coin and $959 per coin, respectively.
The deep price evaporation has caused the market value of cryptocurrencies to shrink. As of now, CoinGecko data shows that the total market value of cryptocurrencies is approximately $852.6 billion, far below the historical high of $3 trillion in November last year.
The continuous decline may trigger a new wave of selling and deepen the credibility and crisis that is plaguing the crypto asset industry. According to CoinGlass's data, the total clearing amount in the cryptocurrency market over the past 24 hours was $566.7 million, with Bitcoin and Ethereum accounting for $271 million and $192 million respectively.
The continuous bad news in the cryptocurrency sector is accompanied by the tightening of major central banks around the world, as the cryptocurrency market, which previously benefited from large-scale stimulus measures, is under increasing pressure.
This week, to curb inflation, the Federal Reserve implemented a 75 basis point aggressive rate hike, the largest increase since 1994. The Federal Reserve stated that it will continue to raise interest rates significantly this year to curb inflation. Subsequently, the Bank of England raised interest rates for the fifth time since December last year, raising the benchmark interest rate to 1.25%, the highest level in 13 years. During the same period, facing a 14 year high inflation data, the Swiss Central Bank raised interest rates by 50 basis points, marking the first rate hike since the outbreak of the global financial crisis in 2007.
Traditional financial markets have also been hit, with global stock markets recording their worst week since March 2020. The S&P 500 fell by about 5.79%, the Dow fell by about 4.79%, and the Nasdaq fell by 4.78%; Stoxx600 fell 4.6%; The FTSE All World index fell 5.6%.
The recent round of pressure has been fermenting and continuing since the detachment of TerrUSD from the US dollar. Subsequently, the cryptocurrency lending institution Celsius decided to stop withdrawing funds, and the cryptocurrency hedge fund ThreeArrows Capital failed to meet the lending institution's request for additional funds on Saturday, becoming the latest 'victim' of the decline in cryptocurrency prices and also raising a new round of concerns for investors.
Noelle Acheson, head of Genesis, a cryptocurrency lending agency, said, "What we are currently seeing is that more liquidations have pushed down the prices and popularity of cryptocurrencies, including Bitcoin, leading to more liquidations and negative emotions. There will still be some liquidations in the near future, but this will come to an end at some stage
Since the beginning of this year, many traders in the industry have been bearish on Bitcoin, "a cryptocurrency trader told reporters. Previously, there were concerns that Bitcoin falling below $20000 could force large leveraged bets in the market to clear, putting greater pressure on Bitcoin. Now, everyone is nervously hoping that Bitcoin can stabilize above the $19000 per coin level.
Bloomberg Intelligence analyst Mike McGlone stated in a report on June 15th that even if it breaks the critical $20000 level, historical data suggests that Bitcoin may find critical support near this level. As shown by previous sell-offs, the cryptocurrency typically finds a point of resilience.
In Mike McGlon's view, Bitcoin may now establish a price base of around $20000, as it did in 2018-2019 and 2014-2015 when it was $5000 per coin and $300 per coin, respectively. The decrease in volatility and price increase are signs of the maturity of digital assets, "he added.
In the field of digital assets, due to the relatively short historical cycle, there are no absolutely effective technical indicators. "Yu Jianing, co chairman of the Blockchain Special Committee of the China Communications Industry Association, told 21st Century Economic Report reporters last week that based on previous experience, the high point of the previous bull market (19798 US dollars/piece) is a key support level. Because in the previous bull bear transition cycle of Bitcoin, the bottom of the bear market never exceeded the high point of the previous bull market. If the US $19798 falls, many historical laws will fail and the market may experience further significant pullbacks.
Yu Jianing stated that digital assets such as Bitcoin have become highly financialized, so the price probability cannot escape the cyclical pattern: there must be a rise and a fall, and there must be a rise.
But he reminded that technology has never been a real risk, and the biggest risk comes from macro factors. This round of deep adjustment is mainly closely related to global financial markets. There is still a great deal of uncertainty about the number of subsequent rate hikes, benchmark rate adjustments, and even scale reductions by the Federal Reserve. Global financial markets are facing severe challenges, and the ultimate support for Bitcoin prices is still unknown
It believes that the global crypto asset market will become mainstream, compliant, and institutionalized, which is an irreversible trend.
In the early stages of the development of crypto assets, global investors were mainly retail investors. With the gradual maturity of the crypto asset market system, the proportion of institutional investors is increasing day by day and has now become an important participant in the market.
Institutional investors emphasize diversified investment and long-term value investment, and Bitcoin represents a macro trend in the long-term development of the digital economy, which is an important reason why it is favored by value investors. Yu Jianing added that the deep participation of institutions such as hedge funds in the crypto asset field has become a long-term trend and has a greater impact on the future development of crypto assets.
After the liquidity driven crypto asset bull market last year, investors continued to take a defensive stance, "wrote AlkeshShah, head of crypto and digital asset strategy at Bank of America, in a report on June 17th. "Despite the pain, it may be healthy to remove the foam in the industry, as investors turn their attention to those crypto asset projects with a clear roadmap, which involve cash flow and profitability rather than pure revenue growth."
(Reporter Jia Junhui also contributed to this article)
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