Crypto update: Bitcoin, Ether jumps down after a record-breaking route

Bitcoin plunged through several closely monitored price levels to its lowest level since the end of 2020, as evidence of growing stress in the crypto industry continues to pile up against a backdrop of money tightening.

The largest digital token measured in market value fell as much as 15% to $ 17,599 on Saturday, marking a record 12th daily decline in a row, according to Bloomberg data. It is still only the biggest fall since Monday. The currency recovered some of these losses and traded at $ 19,075 from 8:30 a.m. in Singapore on Sunday.

Ether fell as much as 19% to $ 881, the lowest since January 2021, before climbing 11% to $ 1005 on Sunday morning in Singapore. The crypto market’s two clock channels are both down by more than 70% from all-time highs set in early November.

“What we see are more liquidations that drive prices and sentiment lower, which triggers more liquidations and negative sentiment – some leaching is still necessary, but this will at some point exhaust itself,” said Noelle Acheson, head of market insight at Genesis, one of the largest and most well-known lenders in digital assets.

Total liquidations in the crypto market were $ 566.7 million in the last 24 hours, with Bitcoin and Ether at around $ 271 million and $ 192 million, respectively, according to data from Coinglass.

The last leg down pushed Bitcoin below $ 19,511, the highest coin hit during its last bull cycle in 2017, which it reached at the end of that year. Throughout its approximately 12-year trading history, Bitcoin has never fallen below previous cycle peaks.

Altcoins was no exception to weaken investor appetite in the wake of Bitcoin’s fall, with every token on Bloomberg’s cryptocurrency monitor trading in red. Cardano, Solana, Dogecoin and Polkadot recorded falls of between 12% and 14%, while privacy symbols such as Monero and Zcash lost as much as 16%.

A toxic mix of bad news cycles and higher interest rates has been detrimental to more risky assets such as crypto. The Federal Reserve raised interest rates on June 15 by three quarters of a percentage point – the largest increase since 1994 – and central bankers signaled that they will continue to rise aggressively this year in the fight to curb inflation.

“Investors continue to position themselves defensively after last year’s liquidity-driven digital asset bull market,” Alkesh Shah, head of crypto and digital asset strategy at Bank of America Corp., said in a note Friday. “While painful, it is likely healthy to remove the sector’s foam as investors shift their focus to projects with clear roadmaps to cash flow and profitability versus pure revenue growth.”

Broader signs of stress emerged with last month’s collapse of the Terra blockchain, and got worse this week following cryptocurrency lender Celsius Network Ltd.’s recent decision to stop withdrawals.

To boost sentiment, crypto hedge fund Three Arrows Capital suffered heavy losses and said it was considering asset sales or a rescue package, while another lender, Babel Finance, followed in Celsius’ footsteps on Friday. Even long-term owners who have avoided selling until now come under pressure, according to researcher Glassnode.

“After Celsius, the focus in recent days has been Three Arrow Capital and Babel Finance.” said Teong Hng, CEO of Hong Kong-based crypto-investment firm Satori Research. “Su Zhu, the founder of 3AC, appears to be missing in action, after suffering heavy losses due to the massive decline in crypto this round.”

Stablecoins – a type of cryptocurrency linked to the value of a fiat currency such as the US dollar – have also suffered.

The four best stable coins saw net outflows last week that were 4.5 times larger than the week before, said the Bank of America’s Shah, after charting net outflows in eight of the previous 10 weeks. Stablecoins often rely on crypto traders to move funds around the ecosystem without having to go out in traditional currencies, so sustained outflows indicate that investors remain defensive, he added.

Even with the $ 20,000 key level piercing, historical data shows that Bitcoin may find key support around that brand, as previous sales show where the token usually finds resistance, according to Mike McGlone, an analyst at Bloomberg Intelligence.

Bitcoin could “build a base around $ 20,000 like it did at around $ 5,000 in 2018-19 and $ 300 in 2014-15,” he said in a note Wednesday. “Failing volatility and rising prices are earmarks for the growing digital value store.”

Nevertheless, the digital currency is rapidly approaching its lowest level in December 2020 at $ 17,589. It traded as low as $ 13,222 the month before that year.

The crypto market is now at a fraction of its heights at the end of 2021, when Bitcoin traded close to 69,000 dollars and traders threw money into speculative investments of all kinds. The total market value of cryptocurrencies was around $ 881 billion on Sunday, down from $ 3 trillion in November, according to price data from CoinGecko.