- Bitcoin and ether have lost 57% and 70% this year
- Withdrawals halted amid liquidity crisis
- ‘$20,000 battleground will be pivotal,’ claims analyst
Investors can barely move for bumping into talk of the chill winds blowing from the crypto winter. Over the weekend, bitcoin fell below $18,000, striking a low of $17,600 on 18 June, and is struggling to stay above $20,000 today. Ethereum-powered ether also plunged to its weakest since January 2021.
Exchanges all over the place are halting withdrawals amid liquidity problems as investors rush for exits. These two cryptos have lost 57% and 70% in 2022.
‘Breaking $20,000 shows you that confidence has collapsed for the crypto industry and that you’re seeing the latest stresses,’ said Edward Moya, senior market analyst at OANDA.
Rising interest rates, an acute risk-off mood across markets, a thinning of liquidity; these are all factors dragging cryptos lower. As one analyst put it, ‘the end of free money from the Fed means the artificial pump that created these assets is no longer working.’
IT’S ALL GONE QUIET OVER THERE
Moya said that ‘even the loudest crypto cheerleaders from the big rally are now quiet. There may still optimism for the long-term most crypto fans refuse to call time to buy the dip.
The cryptocurrency sector has been hit by growing signs of stress in the industry after last month’s collapse of the Terra blockchain. Earlier this month lending company Celsius froze withdrawals and transfers between accounts, while crypto companies started laying off employees. Crypto hedge fund Three Arrows Capital said last week it has suffered large losses.
‘Sooner or later these mad speculative bubbles always end,’ said Neil Wilson of Markets.com. ‘Even long-term HODLers are starting to wobble,’ he said referring to long-term holders of bitcoin and other crypto assets.
‘This $20,000 battleground will be pivotal,’ the analyst said.
