Bitcoin Price Falls Below $20,000 For First Time Since Late 2020

Bitcoin fell below $20,000 for the first time since Saturday, December 2020. There was a widespread market crash due to interest rate hikes, inflation and economic uncertainty caused by the Ukraine war.

The drop below $19,000 on Saturday occurred over several months for Bitcoin, the most popular cryptocurrency. The collapse of two major crypto projects in recent weeks, Terra-Luna and Celsius, has accelerated its downfall and raised doubts about the stability of the cryptocurrency market as a whole. Bitcoin has lost about $900 billion in value since its November peak.

From March 2020 to November 2021, the price of one Bitcoin has increased 12 times to $64,000. It broke the previous record of $19,738 in November 2020.

RA Farrokhnia, a professor at Columbia Business School who specializes in financial technology, said large divestitures have revealed the complexity of the cryptocurrency market in recent years. “This creates a chain effect in addition to the contagious effect,” he said, as investors flee to less risky assets.

Investments in Bitcoin and other cryptocurrencies, along with other risky bets on assets such as “meme stocks”, collectibles including sneakers and trading cards, and collectibles including non-corruptible tokens or media known as NFTs, during a pandemic period has increased in The speculation has been driven by free stimulus controls, low interest rates on other investments, social media craze, the boredom of the pandemic, and fears of missing out on the next big opportunity.

Bitcoin is designed to change the way people transact. Digital currencies rely on a decentralized network of computers that record all transactions in a permanent record known as a blockchain. The registry cannot be altered or controlled by anyone, including the government.

Bitcoin price

As of June 18th, 4:15am EDT.

Source: FactSet

Courtesy of the New York Times

The excitement and potential benefits generated by the rise of Bitcoin have attracted newcomers to learn, work, and invest in cryptocurrencies. Some investors have seen Bitcoin as a safe place to store their cash after central banks have created inflation fears by pouring money into the economy. Bitcoin has an internal limit on its supply. There will be only 21 million tokens. So far, about 19 million electronic products have been mined.

The previous period also prompted Wall Street and Fortune 500 companies to become more open to what they once rejected. Goldman Sachs and Morgan Stanley have announced plans to give wealthy clients access to crypto funds. PayPal and its subsidiary, Venmo, have created an option to trade and shop with cryptocurrency.

Another payment company, Square, bought $50 million in Bitcoin and renamed it Block to partially represent its work using blockchain technology. Tesla bought $1.5 billion from it. Venture capital firm Andreessen Horowitz has raised $4.5 billion for its fourth crypto-focused fund, doubling its previous fund.

Anticipation peaked in April last year when Coinbase, a cryptocurrency exchange, went public with a value of $85 billion. Bitcoin crossed the $60,000 mark for the first time.

Last summer, El Salvador announced that it would be the first country to classify Bitcoin as a fiat currency along with the US dollar. The head of state has updated his Twitter profile picture to include a laser eye, a calling card for Bitcoin holders. El Salvador’s $105 million investment in Bitcoin has been cut in half as its price has fallen.

Senators and mayors across the U.S. started promoting cryptocurrencies as they lobbied a lot in the industry. New York Mayor Eric Adams, who was elected in November, said he would receive his first three salaries in Bitcoin. Senators Cynthia Loomis (R-Wyoming) and Kirsten Gillibrand (D-New York) have given more power to the Commodity Futures Trading Commission, the body in which cryptocurrency companies trade publicly, to frame a regulatory framework for the industry. Proposed legislation to create a work.

Through the craze, celebrities have fueled fears of missing out, whipping NFTs on talk shows and talking about blockchain projects on social media. At this year’s Super Bowl, Matt Damon featured four commercials for cryptocurrency companies, including a warning to viewers that “wealth favors the brave.”

That overblown optimism was shaken this spring as stock markets plummeted, inflation soared and layoffs hit the tech sector. Investors are starting to lose faith in investing in cryptocurrencies, moving their funds to less risky assets. Several high-profile projects were halted during the withdrawal. TerraUSD, the so-called Stablecoin, and TerraForm Labs, which created the experimental coin bank Celsius, both collapsed, wiping out billions of dollars in value and driving the wider market into collapse.

“The cyclical influx of money raises the question of whether there should always be outsiders in this entire ecosystem,” said Farrokhnia.

Despite the growing popularity of investing in cryptocurrencies, Bitcoin has not been very successful as a medium for day-to-day trading. Price movements are volatile and upward trajectories are more valuable for long-term survival. Companies have created sophisticated ways for people to borrow or use Bitcoin as collateral in a sector known as Decentralized Finance (DeFi).

According to an analysis by Columbia Business School, nearly half of Bitcoin wallets worth just over $20,000 are still making money. Frukhnia said 61% of the titles have not sold in the last 12 months, which shows that many have bought them for collection.

Regulators say cryptocurrencies enable tax evasion, risky behavior and fraud. Last year, China cracked down on cryptocurrency mining and trading, and regulators in Hong Kong, Canada and the US have warned of regulatory action. The UK also banned Binance, the world’s largest cryptocurrency exchange.

Investigations have increased as criminals use Bitcoin extensively, including hackers who attacked the Colonial Pipeline last year. But Bitcoin’s transparency, a public ledger anyone can see, has also helped prosecutors track down some criminals and recover ransom money.

The recent sell-off has led to the downsizing of a company that was just a few months ago of super-growth. Coinbase laid off 18% of its employees in June after reporting declining sales and fewer active users. Other cryptocurrency companies, including Gemini, BlockFi and Crypto.com, have also been laid off.

During the past recession known as the “crypto winter” in the industry, proponents encouraged their peers to invest more or “buy down” when prices were low. However, analysts said this time the message did not arrive.

“You have a lot of pessimism about this space,” said Ed Moya, crypto analyst at OANDA. “I am not confident about the number of copies now.”

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